KAKUZI PLC
ANNUAL REPORT AND AUDITED CONSOLIDATED
AND SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
Kakuzi Plc
Annual Report and Consolidated and separate Financial Statements
For the year ended 31 December 2021
Table of Contents
Company information
Notice of Annual General Meeting
Virtual Annual General Meeting Instructions
Minutes of the Ninety Third Annual General Meeting
Chairman’s Statement
Report of the Directors
Statement of Directors’ Responsibilities
Statement on Corporate Governance
Corporate Governance Auditor’s Report
Directors’ Remuneration Report
Independent Auditors’ Report
Financial Statements:
Consolidated and separate statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Separate statement of financial position
Consolidated statement of changes in equity
Separate statement of changes in equity
Consolidated and separate statement of cash flows
Page No
3
4 - 5
5(a) – 5(b)
5(c) – 5(e)
6 – 10
11 – 12
13
14 – 28
29
30
31 – 34
35
36
37
38
39
40
Notes to the consolidated and separate financial statements
41 – 92
Five year record
Major shareholders and distribution schedule
Form of proxy (Annual General Meeting)
93
94
95
2
Kakuzi Plc
Company Information
For the year ended 31 December 2021
COUNTRY OF INCORPORATION
The Company is incorporated in Kenya under the Kenyan Companies Act, 2015.
DIRECTORS
The Directors who held office during the year and at the date of this report were:-
Chairman
Mr. N Ng’ang’a
Mr. C J Flowers* Managing Director
Mr. G H Mclean*
Mr. K R Shah
Mr. D M Ndonye
Mr. S N Waruhiu
Mr. A N Njoroge
Dr. J K Kimani
* British
REGISTERED OFFICE
REGISTRARS
Main Office
Punda Milia Road, Makuyu
P O Box 24
01000 THIKA
Telephone (060) 2033012
E-mail: mail@kakuzi.co.ke
Custody & Registrars Services Limited
Bruce House, 6th Floor
Standard Street
P O Box 8484
00100 NAIROBI
Telephone (020) 2230242
Facsimile (020) 2211773
SUBSIDIARY COMPANIES
AUDITOR
Estates Services Limited
Kaguru EPZ Limited
(100% holding)
(100% holding)
Deloitte & Touche LLP
Deloitte Place
Waiyaki Way, Muthangari
P. O. Box 40092
00100 NAIROBI
SECRETARY
BANKERS
John L G Maonga
Maonga Ndonye Associates
Jadala Place, Ngong Lane, Ngong Road
P. O. Box 73248
00200 NAIROBI
Telephone (020) 2149923
ORDINARY SHARES
KCB Bank Kenya Limited
P O Box 30081
00100 NAIROBI
NCBA Bank Kenya Plc
P O Box 44599
00100 NAIROBI
The Company’s ordinary shares are listed on the Nairobi Securities Exchange and the London Stock
Exchange.
3
Kakuzi Plc
Notice of Annual General Meeting
NOTICE is hereby given that the Ninety Fourth Annual General Meeting of the Members of the Company will
be held via electronic means on Tuesday, 17th May 2022 at 12.00 noon for the following purposes:-
1. To read the notice convening the meeting.
2. To table the proxies received and confirm the presence of a quorum.
3. To approve the minutes of the Ninety Third Annual General Meeting held on 18th May 2021.
4. To receive, consider and adopt the Audited Financial Statements for the year ended 31 December 2021
together with the reports of the Chairman, the Directors and the Independent Auditors thereon.
5. To declare a first and final dividend of Shs. 22 per ordinary share (2020: Shs. 18.00) for the Financial Year
ended 31 December 2021.
6. To approve the Directors’ Remuneration Report as detailed in the Annual Report for the Financial Year
ended 31 December 2021.
7. To re-elect Directors:-
i) Mr. Stephen Njoroge Waruhiu, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the
Company's Articles of Association, offers himself for re-election.
ii) Mr. Daniel Mutisya Ndonye, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the
Company's Articles of Association, offers himself for re-election.
8.
In accordance with provisions of Section 769 of the Kenyan Companies Act, 2015, the following
Directors, being members of the Board Audit & Risk Committee be re-elected to continue to serve as
members of the said Committee:-
a) Mr. Daniel Mutisya Ndonye
b) Mr. Stephen Njoroge Waruhiu
c) Mr. Andrew Ndegwa Njoroge
9
To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company in accordance with the
provisions of Section 721 (2) of the Kenyan Companies Act, 2015 and to authorise the Directors to fix the
Auditors’ remuneration for the ensuing Financial Year in accordance with the provisions of Section 724
(1) of the Kenyan Companies Act, 2015.
SPECIAL BUSINESS
10 To consider and, if thought fit, to amend articles 11 (2), 26 (1) and 45 (3) of the Company’s Articles of
Association by a Special Resolution and the amended articles to read as follows: -
11 (2) “A meeting of the Board shall be held at the head office of the Company or at such other location
contained in the notice convening the meeting. The meetings may be held either by means of physical,
hybrid or conference call, internet, voice over internet protocol, electronic or other communication
facilities or channels permitting all persons participating in the meeting to communicate adequately during
the meeting, allows for simultaneous communication and is capable of being recorded and such
participation shall constitute a presence of a quorum at a meeting of the Directors as if those participating
were present in person.”
4
Kakuzi Plc
Notice of Annual General Meeting (continued)
SPECIAL BUSINESS (continued)
26 (1) “Unless and until otherwise from time to time determined by an ordinary resolution of the
Company, the number of the Directors (excluding Alternates) shall not be less than Two (2) nor more than
Nine (9) in number.
45 (3) “The Board may determine the place and time at which the Members meet and the manner in
which General meetings are coordinated. General meetings may be held either physically or by use of
technology and electronic communication such as video conferencing, webinars, teleconferencing and
any such other technology or a hybrid of both physical and virtual meetings provided that the channels
permitted allows all persons to participate, vote and communicate adequately during the meeting and
is capable of being recorded and such participation shall constitute a presence of a quorum at a
meeting of the Members as if those who were participating were present in person.”
11 To transact any other business of an Annual General Meeting of which due notice has been received.
BY ORDER OF THE BOARD
J L G MAONGA
COMPANY SECRETARY
22 March 2022
Note:
A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote on
his/her behalf and such proxy need not be a member of the Company.
Shareholders will be able to register to follow the meeting, vote electronically or by proxy and may
ask questions in advance of the Annual General Meeting in the manner detailed hereafter.
Registration for the AGM will open on Tuesday, 3rd May 2022 at 8.00 a.m and will close on
Monday, 16th May 2022 at 12.00 noon. Shareholders will not be able to register after Monday, 16th
May 2022 at 12.00 noon.
5
Kakuzi Plc
Virtual Annual General Meeting Instructions
1)
2)
In view of the ongoing Coronavirus 2019 (COVID-19) pandemic and the related public health
regulations and directives the Annual General Meeting will be held virtually.
Shareholders wishing to participate in the meeting should register for the AGM online at
https://digital.candrgroup.co.ke or by dialing USSD short code number *384*043# or via a link
to the AGM Platform that will be sent to them via SMS and/or Email and following the various
registration prompts. In order to complete the registration process, shareholders will need to
have their ID/Passport Numbers which were used to purchase their shares and their shares
account number or CDSC Account Number at hand. For assistance shareholders should dial
the following helpline number+254 20 7608216 from 8:00 a.m. to 4:00 p.m. from Monday to
Friday. Any shareholder outside Kenya should dial the helpline number to be assisted to
register or send an email digital@candrgroup.co.ke.
3)
Registration for the AGM opens on 3rd May, 2022 at 08:00AM and will close on 16th May,
2022 at 12.00 Noon.
4)
Shareholders wishing to raise any questions or clarifications regarding the AGM may do so by:
a) Sending their written questions by email to digital@candrgroup.co.ke or
b) Shareholders who will have registered to participate in the meeting shall be able to ask
questions via SMS by dialing the USSD code *384*043# and selecting the option (ask
Question) on the prompts
or
c) Shareholders who will have registered to participate in the meeting shall be able to ask
questions by visiting https://digital.candrgroup.co.ke platform; Select Attend Event;
Select “Kakuzi Plc AGM”;
Select “Q&A” option tab and submit questions in text box provided; or
d) To the extent possible, physically delivering their written questions by 13th May, 2022
12:00 Noon with a return physical address or email address to the Company Registrars
address: Custody & Registrars, at IKM Place, Tower B, 1st Floor, 5th Ngong Avenue
5)
Shareholders wishing to vote may do so by:
a) Accessing Virtual AGM via https://digital.candrgroup.co.ke platform; Select Attend Event;
Select “Kakuzi Plc AGM”; Select “Voting” option tab and vote; or
b) Accessing Virtual AGM via USSD platform*384*043# ; Use the menu prompts menu
option for “Voting” and follow the various prompts regarding the voting process
6)
In accordance with Section 298(1) of the Kenyan Companies Act, shareholders entitled to
attend and vote at the AGM are entitled to appoint a proxy to vote on their behalf.
A proxy need not be a member of the Company. If the Proxy appointed is not the
Chairman of the AGM, the appointed proxy will need access to a mobile telephone or an
internet enabled device.
A proxy form is included in this Annual Report and is also available on the Company’s
website via this link: https://www.kakuzi.co.ke/regulatory-news. Physical copies of the
proxy form are also available at the Company Registrars address: Custody & Registrars,
IKM Place, Tower B, 1st Floor, 5th Ngong Avenue, Nairobi.
A proxy form must be signed by the appointer or his attorney duly authorized in writing. If
the appointer is a body corporate, the instrument appointing the proxy shall be given
under its common seal or under the hand of an officer or duly authorized attorney of such
body corporate.
A completed form of proxy should be emailed to proxy@candrgroup.co.ke or delivered to
Custody & Registrars, at IKM Place, Tower B, 1st Floor, 5th Ngong Avenue, Nairobi so
as to be received not later than Friday 13th May 2022 at 12.00 Noon. Any person
appointed as a proxy should submit his/her email or mobile telephone number to the
Company no later than Friday13th May 2022 at 12.00 Noon.
Any proxy registration that is rejected will be communicated to the shareholder concerned
not later than Monday 16th May 2022 to allow time to address any issues.
5(a)
Kakuzi Plc
Virtual Annual General Meeting Instructions (continued)
7)
8)
The AGM will be streamed live via a link which shall be provided to all shareholders who will
have registered to participate in the general meeting. Duly registered shareholders and
proxies will receive a short message service (SMS) and/or an email prompt on their registered
mobile numbers, 24 hours prior to the AGM acting as a reminder of the AGM. A second SMS
and/or an email prompt shall be sent one hour ahead of the AGM, reminding duly registered
shareholders and proxies that the AGM will begin in an hours’ time and providing a link to the
live stream.
Duly registered shareholders and proxies may follow the proceedings of the AGM using the
live stream platform and may access the agenda. Duly registered shareholders and proxies
may vote (when prompted by the Chairman) via the USSD *384*043# or Voting Matters tab on
the live stream display screen
9)
A poll shall be conducted for all the resolutions put forward in the notice.
10)
Results of the AGM shall be published within 24 hours following conclusion of the AGM
11)
12)
The preferred method of paying dividends which are below Kshs 140,000.00 is through M-
PESA. Shareholders who wish to receive their dividend through M-PESA and who have not
registered for this mode of payment can opt to receive future dividends by dialing *483*038#
or contacting the Share Registrar, Custody & Registrars Services Limited
All present and former shareholders of the Company are hereby notified that pursuant to the
provisions of the Unclaimed Financial Assets Act No 40 of 2011 Parts II and III, dividends
and shares which have not been claimed for a period of three (3) years or more will require to
be delivered to the Unclaimed Financial Assets Authority (‘the Authority) as abandoned
assets on the appointed date.
Therefore, all present and former shareholders with unpaid dividends are requested to
urgently contact the Share Registrar, Custody & Registrars Services Limited at the address
indicated below to claim any unpaid dividends to avert the risk of the dividends being
forwarded to the Authority.
Custody & Registrars Services Limited (C&R Group)
IKM Place, Tower B, 1st Floor 5th Ngong Avenue, Nairobi
Tel: Mobile: +254 20 7608216,
Email: proxy@candrgroup.co.ke
5(b)
KAKUZI PLC
MINUTES OF THE NINETY THIRD (93RD) ANNUAL GENERAL MEETING OF THE COMPANY HELD BY
ELECTRONIC MEANS ON TUESDAY, 18TH
MAY 2021 AT 12:00 NOON
Present:
Mr Nicholas Ng’ang’a
Mr Christopher J Flowers
Mr Daniel M Ndonye
Mr Stephen N Waruhiu
Mr Andrew N Njoroge
Dr John K Kimani
Mr Graham H Mclean
Mr Ketan R Shah
Members
- Chairman and shareholder
- Managing Director
- Director
- Director
- Director
- Director and Shareholder
- Director, Shareholder and Holding proxy for
Lintak Investments Limited and Bordure Limited
- Finance Director and Shareholder
- 59 Shareholders were present
In Attendance:
Ms Anne Muraya
- Representing Deloitte and Touche, LLP
Mr John Maonga
External Auditors
- Company Secretary
The Chairman opened the meeting by welcoming the shareholders to the Ninety Third Annual General
Meeting (AGM) of the Company. He explained that this AGM had been convened and held virtually due to
the continued COVID-19 pandemic. He thanked all the members present for attending this second
virtually held AGM of the Company.
Thereafter, he introduced himself, the Directors, the Company Secretary and the representative of the
External Auditors who were present at this meeting.
1. NOTICE AND CONFIRMATION OF QUORUM
At the request of the Chairman, the Company Secretary read the notice convening this meeting,
tabled the proxies received and confirmed the presence of a quorum to transact the business of this
meeting.
The Chairman thereupon declared the meeting properly convened and constituted.
2. CHAIRMAN’S REMARKS
The Chairman updated the shareholders on the operations and activities undertaken by Management
and staff members to curb the spread of the COVID-19 virus as well as support the efforts to the
Community and the County Government in tackling the COVID-19 pandemic. He also highlighted the
collaboration with the Ministry of Health to spearhead vaccination exercise within the Community by
use of the Company’s clinics where 400 persons were vaccinated against COVID-19 virus. The
Company had initiated Community Social Investment programs to prevent the spread of COVID-19
virus including provision of ICU beds, clean water, personal protective equipment (PPEs) and more
school desks to assist in decongesting classrooms. Further, he highlighted the challenges which were
experienced by the Company during its operations in 2020 and presented the outlook of the Company
for the year 2021. Despite the COVID-19 pandemic, he expressed his confidence that the Company
had adopted exceptional strategies that would provide additional opportunities and diversify the
revenue streams of the Company to better improve the performance.
The Chairman requested the shareholders to ask questions relating to the Financial Statements
which would be answered as the meeting progressed.
The Chairman then explained to the members that all the resolutions that were required to be passed
at this meeting would be read by the Company Secretary and the voting process would commence
immediately after the Company Secretary would conclude reading the resolution until 2.00 p.m. (East
African Time) on 18 May 2021. The results of the polling shall be placed on the Company’s website
within 24 hours after the closure of the voting time.
The Chairman reported that the minutes of the Ninety Second Annual General Meeting of the
Company held on 9 June 2020 had been distributed to the Shareholders and were available on the
Company’s website and he recommended that the minutes be taken as read.
5(c)
MINUTES OF THE NINETY THIRD (93RD) ANNUAL GENERAL MEETING OF THE COMPANY HELD BY
ELECTRONIC MEANS ON TUESDAY, 18TH MAY 2021 AT 12:00 NOON (continued)
KAKUZI PLC
3. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
The Chairman recommended to the shareholders to take the Chairman’s Statement and the Directors
report in the Annual Report for the Financial Year ended 31 December 2020 as read.
At his request, Ms Anne Muraya, the representative of the External Auditors, read the Independent
Auditors’ Report which was on pages 23 to 26 of the Annual Report for the Financial Year ended 31
December 2020.
The Chairman confirmed that the Company had received shareholders’ questions and that answers
had been placed on the Company’s Website. Further, the Chairman explained that the shareholders
could still send in more questions which would be answered and the same would be placed on the
Company’s Website.
The Chairman invited the Managing Director and he addressed the questions raised by the
shareholders prior to the meeting.
Thereafter, the Chairman requested the shareholders to dial in live and ask questions relating to the
Financial Statements which were answered to the satisfaction of members.
The Chairman requested the Company Secretary to read the resolutions that were to be voted on by
the Shareholders.
The Company Secretary read the seven resolutions that were to be voted on and he confirmed that
there was no any other business submitted for discussion for this meeting.
The Company Secretary thereafter, explained to the shareholders that a tutorial video would be
played at the end of the meeting to guide the shareholders on the online voting procedure in respect
of the resolutions.
4. RESOLUTIONS BASED ON POLLING RESULTS
After the closure of the voting period and based on the analysis and outcome of the polling result of
the Ninety Third (93rd) Annual General Meeting, the following resolutions were duly passed:-
a. APPROVAL OF MINUTES
On a proposal by Mr Alois Chami and seconded by Mr Stephen Irungu Kimani, it was resolved
that the minutes of the Ninety Second Annual General Meeting held on 9 June 2020 be and are
hereby approved.
b. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
On a proposal by Mr Tom Oloo and seconded by Mr Gerald M’Ikunyua, it was resolved that
the Audited Financial Statements of the Company for the year ended 31 December 2020
together with the reports of the Chairman, the Directors and the Independent Auditors thereon
be and are hereby adopted.
c. DIVIDEND
On a proposal by Ms Salome Njari Njenga and seconded by Ms Grace Musimbi Oduor, it was
resolved that a first and final Dividend of Kshs. 18.00 per ordinary share in respect of the
Financial Year ended 31 December 2020 be and is hereby approved for payment on or before
30th June 2021 to members on the register at the close of business on 31st May 2021.
d. DIRECTORS’ REMUNERATION REPORT
On a proposal by Mr Moses Muthui and seconded by Mr John Wandugo, it was resolved that the
Directors’ Remuneration Report as detailed in the Annual Report for the Financial Year ended 31
December 2020 be and is hereby approved.
5(d)
MINUTES OF THE NINETY THIRD ANNUAL GENERAL MEETING (continued)
KAKUZI PLC
4. RESOLUTIONS BASED ON POLLING RESULTS (Continued)
e. RE-ELECTION OF DIRECTORS
i.
ii.
On a proposal by Mr Stephen Irungu Kimani and seconded by Ms Sarah Wairimu
Muhoho, it was resolved that Mr Nicholas Ng’ang’a, a Director who is over seventy
years old, retired by rotation in accordance with Article 27 of the Company’s Articles of
Association and, being eligible in accordance with Article 28 of the Company's Articles of
Association and had offered himself for re-election, be and is hereby re-elected.
On a proposal by Ms Christine Rakamba Obare and seconded by Ms Emily Maina, it
was unanimously resolved that Mr Andrew Ndegwa Njoroge, a Director who retired by
rotation in accordance with Article 27 of the Company’s Articles of Association and,
being eligible in accordance with Article 28 of the Company's Articles of Association and
had offered himself for re-election, be and is hereby re-elected.
iii. On a proposal by Mr Ketan Shah and seconded by Ms Mary Ndung’u, it was resolved
that Dr. John K Kimani, a Director who retired in accordance with Article 26 (5) of the
Company’s Articles of Association and in accordance with the provisions of clause 2.5.1
of the Code of Corporate Governance Practices for Issuers of Securities to the Public,
2015 and, a Special Notice having been received which proposed his re-election
pursuant to Section 287 of the Kenyan Companies Act, 2015, and had offered himself for
re-election, be and is hereby re-elected.
f. RE-ELECTION OF MEMBERS OF THE BOARD AUDIT AND RISK COMMITTEE
On a proposal by Ms Brigit Muruu and seconded by Ms Sophie Njeri Moturi, it was resolved that
in accordance with the provisions of Section 769 of the Kenyan Companies Act, 2015, the
following Directors, being members of the Board Audit and Risk Committee be and are hereby re-
elected to continue serving as members of the said Committee:-
a) Mr Daniel M Ndonye
b) Mr Stephen N Waruhiu
c) Mr Andrew N Njoroge
g. RE-APPOINTMENT OF AUDITORS
On a proposal by Mr Alois Chami and seconded by Mr Tom Oloo, it was unanimously resolved
that in accordance with the provisions of Section 721 (2) of the Kenyan Companies Act, 2015,
Messrs Deloitte & Touche LLP be and are hereby re-appointed as the Auditors of the Company
for the Financial Year ending 31 December 2021 and the Directors were authorized to fix their
remuneration in accordance with the provisions of Section 724 (1) of the Kenyan Companies Act,
2015.
THERE BEING NO OTHER BUSINESS, THE CHAIRMAN DECLARED THE MEETING CLOSED AT
12.50 P.M. (EAT) AND URGED THE MEMBERS TO TAKE CARE AND BE SAFE DURING THE
COVID-19 PANDEMIC.
Confirmed
Chairman
Date
5(e)
Kakuzi Plc
Chairman’s Statement
For the year ended 31 December 2021
RESULTS
The year saw the group post reduced earnings due to lower avocado production and prices. The lower
production was due to the avocado orchards entering their bi-annual offseason bearing cycle which results in
a large crop of avocados in one year, followed by a small crop the following year.
We, however, experienced greater earnings from macadamia sales during the year as a result of increased
yields from our young orchards. Product diversification and value addition remain key investment areas to
enhanced stakeholder value and our continued commitment to these is critical for the long term.
At the field level, our Hass avocado volumes were lower than the previous year by 17.5% as the orchards
entered a low production year. The revenue decline was also compounded by a fall in the European market
price due to a higher fruit supply from Peru and Columbia.
Avocado production volumes were lower than in 2020, and we could not meet all of our customers’ orders.
However, it is instructive to note that the Kakuzi order book from the international markets was far more than
we could supply, signifying continued market confidence and trust in our products.
Last year's trading performance recorded greater profits from macadamia. Notably, macadamia sales
increased to 513 tons from 320 tons in 2020. As the young macadamia orchards mature, we anticipate these
volumes growing.
Tea earnings have marginally increased from improved market prices but the growth in Kenya tea production
and supply remains of concern.
Our Blueberry production is still at a pilot trial stage, although with each year, the bushes are growing in size,
which leads to higher production volumes. Blueberry production in Kenya is in its infancy, and we have a
long way to go to fully appreciate the potential of this crop for Kakuzi and the Nation. We believe that this is a
very high potential product within our portfolio, and remain optimistic of Blueberry production as one of our
diversification strategy key pillars.
DIVIDEND
Your board recommends an increase in the dividend per share to Shs 22.00 compared to Shs 18.00 per
share in 2020.
OVERVIEW
Over the year, the international avocado and macadamia markets were negatively influenced by the COVID-
19 pandemic, resulting in less consumer activity and from increased supply from other origins in the
European avocado market.
Within the avocado orchards we have stepped up canopy management strategies on the mature avocado
crop to mitigate the bearing cycles risk. Such initiates along with field expansion (planting of new seedlings)
should help to maintain production volumes at consistent levels.
Currently, we have established a thriving new but immature avocado development area (about 373
hectares), with production expected in the coming seasons. Land preparation for another new Avocado
development is also underway in an area previously under pineapple production.
Last year, we also commenced planning and field preparation for new macadamia orchards, with
establishment due to begin in the third Quarter of 2022. This will also be on land previously under pineapple
cultivation.
6
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2021
OVERVIEW (continued)
Our recent investments in the latest colour sorting technology in the macadamia Cracking facility is designed
to increase the factory’s capacity whilst at the same time producing a high-quality product. The investment in
technology for food processing is paying dividends at the post-harvest and value addition level. This year, we
intend to step up such investments as we explore local retail sales and supplies to the medium to large
Hotel/Restaurant/Café (HORECA) market.
We have also integrated state-of-the-art irrigation systems at field production level, fed from our own
rainwater harvesting catchment dams. The efficient use of irrigation and maximising water catchments at
Kakuzi are vital components of our sustainability strategy.
Exciting opportunities are also emerging from our animal feed and livestock operations. We believe that
producing affordable good, quality hay and diversifying our meat production to include goats will strengthen
this section of our business.
We believe that it is no longer acceptable to talk about being carbon net-zero; we must farm in a manner that
captures atmospheric carbon into our soils to grow our plants. Sustainable traditional agricultural techniques
have long been practised in our Country; however, given today's populations the use of technology and
science to create the 'sustainable farming handbook' of the future is essential. Since 2018 Kakuzi has been
working with the Carbon Trust in the UK to set ourselves a strict reporting criterion to measure our Carbon
footprint. The preservation of agricultural soils, the conservation of water, the enhancement of natural
watersheds and catchments must be combined with many other elements if we are going to future proof our
farming. Our strategic plans are now heavily focused on how Kakuzi operationalises these vital elements into
our business.
WORLD-CLASS
Within the last financial year, we made history as the first group in sub-Sahara Africa to establish a functional
Independent Human Rights Advisory Committee (IHRAC) benchmarked against the United Nations Guiding
Principles on Business and Human Rights. The IHRAC chaired by former Attorney General Prof Githu
Muigai provides independent Human Rights advice to the Board, effectively enhancing our corporate
governance standards. In appointing the IHRAC, Kakuzi joined a growing list of globally focused institutions’
progressively adopting the UN Guiding Principles on Business and Human Rights.
As a key operations pillar, Kakuzi has also established a world-class Operational Level Grievance
Mechanism (OGM) fully aligned to the UN Principles of Business and Human Rights. The Kakuzi OGM is a
systematic and transparent process for receiving, investigating, and addressing group-related grievances.
Kakuzi’s OGM is called SIKIKA, which in Kiswahili means “be heard”.
The establishment of SIKIKA and the committees and guiding mechanisms surrounding it has been widely
welcomed and endorsed by international and national institutions. We believe this is what progressive
businesses need to do to strengthen their relationships with stakeholders and demonstrate our commitments
to do the right thing.
Kakuzi was also the first agricultural counter player at the Nairobi Securities Exchange (NSE) to release its
Environmental, Social, and Governance (ESG) report in December 2020. The latest Kakuzi ESG report aptly
titled 'Future-proofing agriculture' confirms that, your group is an intergrated part of the surrounding
community. The ESG report represents our holistic approach to measuring our Economic, Social and
Environmental impact across our business.
Economic empowerment of smallholder avocado farmers has been a flagship project of Kakuzi for many
years. Again this year, we were able to pay farmers who supplied this program the equivalent of 87% of the
international net market price.
7
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2021
OPERATIONS
Throughout the year we continued to adhere to COVID-19 protocols with considerable expenditure on
providing the correct safety measures in our work and living spaces.
Working closely with the Ministry of Health, our clinical service team provided over 4,000 vaccinations
through our clinics to both employees and community members.
Logistics both nationally and internationally came under some strain. Still, due to the dedicated service of the
Government Agencies involved in exporting fresh produce, the impact on our operations was not significant.
Good rainfall throughout the year allowed our 19 dams to fill providing us with adequate water resources.
Our micro-jet irrigation systems now cover over 1,363 ha of avocado and macadamia orchards.
As our operations expand, we will continue recruiting and training more graduate managers. A key
component of our operations is our Management Training (MT) program which aims to mentor and nurture
University graduates to assume leadership positions in an equal opportunity environment. We have already
advertised several management trainee opportunities this financial year with a positive response.
Within our revenue diversification strategy, we will continue to develop a range of additional value-added
consumer products for the domestic and regional markets on a priority basis. Such products include a frozen
blueberry range and consumer pack; high-quality roasted macadamia snacks to be sold in local
supermarkets and greengrocery retail stores as we continue developing strategic partnerships.
CORPORATE SOCIAL INVESTMENT (CSI) AND SUSTAINABILITY
A firm commitment to our corporate citizenship role continues to find expression in our constructive
engagement with various stakeholders, including our employees, workers union, local communities, avocado
smallholder growers, National Government, County Government, civil society and international bodies. The
overarching objective of these engagements is to ensure that we carry out our business ethically and
sustainably.
To measure our progress against our environmental and social responsibilities, Kakuzi has focused on six of
the United Nations Sustainable Development Goals (SDG's) which is well covered in our ESG report. Whilst
we accept the importance of all seventeen SDG's we feel that these six best capture our operational needs
and aspirations and those of our wider community.
An integral part of our sustainability initiatives is measuring our carbon footprint to monitor and control our
carbon emissions. We have now done this for the last three years and this will inform our environmental
interventions as we advance.
Our health care services team, working closely with the Muranga County Ministry of Health to support our
employees and the community, shifted their COVID-19 response to an aggressive vaccination drive.
The foregoing notwithstanding, we continued to provide other COVID-19 preventive measures, especially for
schools. We provided handwashing tanks, reusable facemasks, and desks to 113 community schools
benefitting approximately 10,000 learners.
8
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2021
CORPORATE SOCIAL INVESTMENT (CSI) AND SUSTAINABILITY (continued)
Tabasamu, our menstrual hygiene program, continues to be an integral part of our health promotion
services. It provides reproductive health interventions, including menstrual health awareness. It provides
sanitary towels to female employees and the adolescent girls within our immediate community as well as
surrounding schools through a partnership with local community-based organisations. We supported over
2,000 employees and school girls with sanitary products.
To realise these objectives, the engagement is facilitated by a dedicated corporate affairs team, including a
full-time community relations manager and bolstered by three community liaison officers. Areas of attention
include but are not limited to employee welfare, employee terms and conditions of work, economic
empowerment to local communities, National and County Government legislation. This stakeholder
engagement process is active and ongoing.
STRATEGIC GOALS & DEVELOPMENTS
The continued expansion of both our avocado and macadamia production is in full swing. By the end of
2021, our avocado and macadamia orchards covered 927 ha and 1,032 ha respectively. In 2022 a further 60
ha of avocados and 100 ha of macadamias will be established. We anticipate that by 2026 all the land
previously under pineapple production will have been converted to these two crops.
The increased demand for super foods regionally and domestically has also provided new opportunities to
develop diverse consumer product ranges, including uplifting the quality and value of our sustainably-grown
timber products.
Albeit small, we embarked on a dedicated goat meat production venture, and we anticipate sales to begin in
the second quarter of 2022. This venture aims to provide quality traceable goat meat for the HORECA
markets.
We are committed to delivering against the revenue diversification strategy that is anchored on a value
addition foundation. This will remain a primary focus for the group in the coming years, and we are actively
exploring pipeline opportunities as part of our agribusiness strategic goals.
As we reported last year, the income diversification strategy shows positive results.
INNOVATION
Within the last financial year, Kakuzi maintained its innovation streak, successfully managing to unveil an
online Agricultural extension training platform. Our online avocado farmers academy ‘Avocademy’ and
YouTube training videos have proven to be a great success in training farmers in avocado growing
techniques. Our economic empowerment initiatives to provide farmers with the international market price for
their fruit will continue to be part of strategic plans in future years. Only by empowering farmers in this
manner will they fully reap the benefits of avocado agribusiness.
The fact is that access to traditional markets is becoming complex and is now more than ever a requirement
that we demonstrate that Produce of Kenya fruit meets all the required criteria, including quality, traceability,
and sustainability. We leave our farmers with limited marketing options if we do not teach them how to grow
fruits properly for valuable export markets. This is also not economically sustainable.
As part of our farmers development programs Kakuzi has continued to provide free avocado maturity testing
services during the harvesting seasons. The services ensure compliance with quality standards and
enhance the value of Kenyan fruit in the global market. Export of immature fruit is detrimental to our
collective interests as it erodes our national branding for fruit bearing the Produce of Kenya label.
9
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2021
STAFF
As a Board, we would like to express our sincere gratitude to all our employees. The well-being of our staff
through the COVID-19 pandemic has been paramount to us. With the support of everyone, we have been
able to continue our operations and keep each other safe. By following the correct COVID-19 protocols, we
have also been able to maintain our training and staff development programmes which are critical to the
successful running of the Group. Still, it is essential to note the vital role our front line clinical service team
has played in ensuring that our employees are kept as safe as they possibly could from COVID-19.
LOOKING AHEAD
The likelihood is that we will be living with COVID-19 for some time to come, and indeed, its impacts on
crucial parts of the supply and logistic chain remain unknown. Therefore, we stay focused on conducting our
business operations in a professional, transparent and respectful manner to deliver a quality and sustainably
grown product range for domestic and international consumption under any weather or related risk.
NICHOLAS NG’ANG’A
CHAIRMAN
22 March 2022
10
Kakuzi Plc
Report of the Directors
For the year ended 31 December 2021
The Directors submit their report together with the audited Financial Statements for the year ended 31
December 2021, which disclose the state of affairs of Kakuzi Plc (the “Group and the Company”). The
annual report and financial statements have been prepared in accordance with the Kenyan Companies Act,
2015.
PRINCIPAL ACTIVITIES
The principal activities of the Group comprise:
Growing, packing and selling of avocados
Growing, cracking and selling of macadamia nuts
The cultivation and sale of tea green leaf
Forestry development and sale of forestry products
Livestock farming, animal feed and sale of beef
Growing, packing and selling of blueberries
The two subsidiary companies are dormant.
BUSINESS REVIEW
A review of the business of the Group is incorporated within the Chairman’s statement on pages 6 to 10.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of possible risks and uncertainties that could impact the Group’s operations. The Group
regularly monitors the risks. The information on the Group’s financial risks is disclosed in Note 4 of the
Financial Statements. The following risks relating to the Group’s principal operations have been identified:
i)
ii)
iii)
iv)
Climate change: level of rainfall affecting crop yields and in extreme cases, crop viability.
Price volatility: changes in market prices impact profitability each season.
Currency fluctuation: profit volatility arising from sales denominated in foreign currency.
Cost of labour: increased cost of production and lower profitability.
RESULTS AND DIVIDEND
The net profit for the year of Shs 319,736,000 (2020: Shs 622,034,000) has been added to retained
earnings. The Directors recommend the approval of a first and final dividend of Shs 22.00 (2020: Shs 18.00)
per ordinary share.
The results for the year are set out on pages 35 to 92 in the attached Financial Statements.
ANNUAL GENERAL MEETING
The Ninety Fourth Annual General Meeting of the Company will be held via electronic means on Tuesday,
17th May 2022 at 12.00 noon.
11
Kakuzi Plc
Report of the Directors (continued)
For the year ended 31 December 2021
DIRECTORS
The Directors who held office during the year and at the date of this report are set out on page 3.
The Directors’ interests in the share capital of the company are listed below: -
At 31 December 2021
Non-
Beneficial
Ordinary
shares
Beneficial
Ordinary
shares
At 31 December 2020
Non-
beneficial
Ordinary
shares
Beneficial
Ordinary
shares
100
-
200
1,000
-
-
-
6,338,099
-
-
-
-
-
-
-
-
100
-
200
1,000
-
-
-
6,330,699
-
-
-
-
-
-
-
-
Mr. G H Mclean
Mr. C J Flowers
Mr. K R Shah
Mr. N Ng’ang’a
Mr. D M Ndonye
Mr. S N Waruhiu
Mr. A N Njoroge
Dr J K Kimani
Mr. Stephen Njoroge Waruhiu, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the Company's Articles
of Association, offers himself for re-election.
Mr. Daniel Mutisya Ndonye, a Director who retires by rotation in accordance with Article 27 of the Company’s
Articles of Association and, being eligible in accordance with Article 28 of the Company's Articles of
Association, offers himself for re-election.
In accordance with provisions of Section 769 of the Kenyan Companies Act, 2015, the following Directors,
being members of the Board Audit & Risk Committee be re-elected to continue to serve as members of the
said Committee:-
a) Mr. Daniel Mutisya Ndonye
b) Mr. Stephen Njoroge Waruhiu
c) Mr. Andrew Ndegwa Njoroge
DISCLOSURE OF INFORMATION TO AUDITORS
Each Director confirms that, so far as he is aware at the date of approval of this report, there is no relevant
audit information of which the Group’s and Company’s auditor is unaware and that each Director has taken
all the steps that he ought to have taken as a Director to make himself aware of any relevant audit
information and to establish that the Group’s and Company’s auditor is aware of that information.
AUDITORS
Deloitte & Touche LLP, having expressed their willingness, continue in office in accordance with the
provisions of section 721 (2) of the Kenyan Companies Act, 2015. The Directors monitor the effectiveness,
objectivity, and independence of the auditor. The Directors also approve the annual audit engagement
contract, which sets out the terms of the auditor's appointment and the related fees.
BY ORDER OF THE BOARD
K R SHAH
DIRECTOR
22 March 2022
12
Kakuzi Plc
Statement of Directors’ Responsibilities
For the year ended 31 December 2021
The Kenyan Companies Act, 2015 requires the Directors to prepare financial statements for each financial
year which give a true and fair view of the financial position of the Group and of the Company at the end of
the financial year and of their financial performance for the year then ended. It also requires the directors to
ensure that the Company and its subsidiaries maintain proper accounting records that are sufficient to show
and explain the transactions of the Company and its subsidiaries; disclose with reasonable accuracy the
financial position of the Group and the Company; and that enables them to prepare financial statements of
the Group and the Company that comply with prescribed financial reporting standards and the requirements
of the Kenyan Companies Act, 2015. The Directors are also responsible for safeguarding the assets of the
Group and for taking reasonable steps for the prevention and detection of fraud and error.
The Directors accept responsibility for the preparation and presentation of these Financial Statements in
accordance with International Financial Reporting Standards and in the manner required by the Kenyan
Companies Act, 2015. They also accept responsibility for:
i. Designing, implementing and maintaining such internal control as they determine necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or
error;
ii. Selecting suitable accounting policies and then apply them consistently; and
iii. Making judgements and accounting estimates that are reasonable in the circumstances
In preparing the Financial Statements, the Directors have assessed the Group’s and the Company’s ability to
continue as going concerns and disclosed, as applicable, matters relating to the use of going concern basis
of preparation of the financial statements. Nothing has come to the attention of the Directors to indicate that
the Group and the Company will not remain going concerns for at least the next twelve months from the date
of this statement.
The Directors acknowledge that the independent audit of the Financial Statements does not relieve them of
their responsibilities.
Approved by the Board of Directors on 22 March 2022 and signed on its behalf by:
_________________________
K R SHAH
DIRECTOR
___________________________
C J FLOWERS
DIRECTOR
13
Kakuzi Plc
Statement on Corporate Governance
For the year ended 31 December 2021
Overview of the Corporate Governance Framework
The Board is committed to ensuring that the business is run in a professional, transparent, just and equitable
manner to protect and enhance shareholder value and satisfy the interests of our stakeholders. The
principles and standards adhered to by the Board have been developed with close reference to guidelines
on corporate governance issued by the Capital Markets Authority, Code of Corporate Governance Practices
for Issuers of Securities to The Public 2015 (the Code) and other global best practices. This statement
outlines the Kakuzi Group's approach toward corporate governance policies and practices.
This Statement describes how the Group applies the main principles of the Code. The Group acknowledges
and continues to consider the recommendations of the Code carefully and implement as appropriate. In
implementing the Code, the Directors have taken account of the Group's size and structure and the fact that
there is a controlling shareholder which itself is a listed entity in the United Kingdom, Camellia Plc.
This Corporate Governance Statement is current as at 31 December 2021 and has been approved by the
Board of Directors.
Governance Framework
The Group operates within a clearly defined governance framework which provides for delegated authority to
strategic sub committees with clear lines of responsibility without abdicating the responsibility of the Board.
Through the framework, the Board sets out the strategic direction of the Group while entrusting the day-to-
day running of the organization to the executive management led by the Managing Director. The Board
operates through three committees and one independent advisory committee mandated to review specific
areas and assist the Board undertake its duties effectively and efficiently. The structure of the relationships
between the Board and Board’s sub committees is illustrated below:
Board
Independent
Human Rights
Advisory
Committee
Company Secretary
Audit and Risk
Committee
Nomination and
Remuneration
Committee
Legal Risk
Committee
Internal
Audit
External
Audit
14
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Board composition, size and independence
The Group is governed by a Board of Directors each of whom is, with the exception of the Managing
Director, elected by the shareholders.
The Board currently comprises of eight Directors, three of whom are independent non-executive Directors.
Of the remaining Directors, two are executive, and three are non-executive, including a non-executive
Chairman. The independent and other non-executive Directors constitute over two-thirds of the Board. The
Directors' abridged biographies appear on the Group's website, and the names of the Directors are listed on
page 3 of this Annual Report. (https://www.kakuzi.co.ke/management).
The non-executive Directors are independent of management. Their role is to advise, constructively
challenge and monitor the success of management in delivering the agreed strategy within the risk appetite
and control framework that is set by the Board.
Based on the size, complexity and governance needs of the Group, the current Board size is under review
and an increase by one more member will be considered at the Annual General Meeting. The size of the
Board has conformed to the applicable legal and regulatory frameworks.
An appropriate liability insurance for directors has been arranged for indemnifying their liabilities arising out
of corporate activities. This insurance coverage is reviewed on an annual basis.
Board Diversity
The Board is well composed in terms of the academic qualifications, technical expertise, experience, industry
knowledge and balance of executive, non - executive and independent Directors.
The Board recognises that opportunities exist to consider diversity and gender balance upon future
retirement of non-executive Directors as per the governance guidelines and has appointed the Nomination
and Remuneration Committee to develop a Board Gender and Diversity policy and set measurable
objectives to implement diversity and gender balance on the Board and recommend them to the Board for
adoption. Below is a highlight of the Board Diversity;
Director’s Name
Occupation
Appointment Date
Mr Nicholas Ng’ang’a – Chairman – Non-Executive Director Farmer/Businessman 28 November 2002
Mr Christopher Flowers – Managing Director
(Executive Director).
Mr Graham Mclean – Non-Executive Director
01 January 2005
28 March 2013
Agriculturist
Engineer
Mr Daniel M Ndonye – Independent Director
Accountant
29 November 2012
Mr Stephen Waruhiu –Independent Director
Mr Andrew Ndegwa Njoroge –– Independent Director
Valuer and Estate
Agent
Accountant
29 November 2012
2 August 2016
Dr John Kibunga Kimani – Non-Executive Director
Agriculturist
1 November 2020
Mr Ketan Shah – Finance Director (Executive Director)
Accountant
28 August 2007
Board Independence
The Board has documented in their Board Charter the criteria for determining the independence status of the
members of the Board of Directors. During the year under review there were three independent non-
executive Directors, however, towards the end of the year (November 2021) two of the directors (Mr D M
Ndonye and Mr S Waruhiu) attained 9 years of service as directors since their appointment which is the
maximum term limit for a director to remain independent. Notwithstanding their long term service, given their
extensive business experience and not being connected with any director or substantial shareholder of the
Group, the Board is of the opinion that they continue to be independent as the Board reviews the way
forward.
15
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Board Independence (continued)
The non-executive Directors who are six in total are also independent of management and have separate
and independent access to the senior management and the Company Secretary at all times. Day-to-day
operation of the businesses of the Group is delegated to the management. They are being closely monitored
by the Board and are accountable for the performance of the Group as measured against the corporate
goals and business targets set by the Board.
Board appointment and re-appointment
The Board, with the assistance of the Nomination and Remuneration Committee, regularly assesses the
skills, experience, tenure and diversity required collectively for the Board to effectively fulfil its role.
All the Directors, excluding the Managing Director, are subject to retirement by rotation and must seek re-
election by shareholders at least once every three years in accordance with the Articles of Association.
During the 2021 Annual General Meeting Mr. Nicholas Nganga, Mr Andrew Njoroge and Dr John Kimani
offered themselves up for re-election and were re-elected.
Any Director appointed to fill a casual vacancy on the Board or as an addition to the existing Board who is
appointed during the year is required to retire and seek re-election at the next Annual General Meeting. Dr
John Kibunga Kimani who was appointed effective 1 November 2020 also retired by rotation and was re-
appointed at the last Annual General Meeting with the shareholders’ approval in line with the Articles 27 and
28 of the Company’s Articles of Association.
All Directors have received an appointment letter setting out the terms of their appointment.
The following changes occurred in the year under review:-
Independent Human Rights Advisory Committee (IHRAC) members appointment
Renaming of the Litigation Committee to Legal Risk Committee
Separation of powers and duties of the Chairman and the Managing Director
The Chairman and the Managing Director have distinct and clearly defined duties and responsibilities set out
in writing in the Group’s board charter. The separation of the functions of the Chairman (a Non-Executive
Director) and the Managing Director (Executive Director) supports and ensures an appropriate balance of
power, increased accountability, and greater capacity of the Board for independent decision making. The
roles of the Board are separated from that of the management.
The Chairman provides overall leadership to the Board without limiting the principles of collective
responsibility for Board decisions. The Managing Director is responsible to the Board and takes
responsibility for the effective and efficient running of the Group businesses on a day-to-day basis.
A summary of the key responsibilities of each role can be found below:
Chairman
a) Setting the style and tone of Board discussions and creating the overall conditions for Board and
director effectiveness.
b) Ensuring that the Board as a whole is enabled to play a full and constructive part in the development
c)
and determination of the Group's strategy and overall commercial objectives.
Ensuring that the development of the Group’s businesses and the protection of the reputation of the
Group receive sufficient attention from the Board.
16
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Separation of powers and duties of the Chairman and the Managing Director (continued)
Managing Director
a) Direct and control the work and resources of the Group and ensure the recruitment and retention of
the required numbers and types of well-motivated, trained and developed staff to ensure that it
achieves its mission and objectives.
b) Prepare and recommend to the Board, a long term strategy and annual business plan and budgets
and monitor progress against these plans to ensure that the Group attains its objectives as cost-
effectively and efficiently as possible.
c) Provide strategic advice and guidance to the Chairperson and members of the Board, to keep them
aware of developments within the industry and ensure that the appropriate policies are developed to
meet the Group’s mission and objectives and to comply with all relevant statutory and other
regulations.
d) Establish and maintain valid formal and informal links with major customers, relevant government
departments and agencies, local authorities, key decision-makers and other stakeholders generally,
to exchange information and views and to ensure that the Group is providing the appropriate range
and quality of services.
e) Develop and maintain an effective marketing and public relations strategy to promote the products,
services and image of the Group on the broader community.
f) Represent the Group in negotiations with customers, suppliers, government departments and other
key contacts to secure for it the most effective contract terms.
g) Oversee the preparation of the annual report and accounts of the Group and ensure their approval
by the Board.
h) Develop and direct the implementation of policies and procedures to ensure that the Group complies
with all statutory regulations.
Company Secretary
The Company Secretary, who is a member of the Institute of Certified Public Secretaries of Kenya and in
good standing, with the assistance of the Finance Director, provides guidance to the Board on its duties and
responsibilities and other matters of governance and monitoring and coordinating their completion.
a) The Company Secretary facilitates effective communication between the organization and the
shareholders.
b) Ensures that the Board complies with its obligations under the law and the Company articles of
association;
c) Provides guidance to the Board on its duties and responsibilities and other matters of governance;
d) Assists the Chairperson of the Board in organizing the Boards activities;
e) Coordinates the governance audit process; and
f) Maintains and updates the register of conflict of interest.
Roles and Functions of the Board
The primary role of the Board is to protect and enhance long-term shareholders’ value. It sets the overall
strategy for the Group and supervises executive management. It also ensures that good corporate
governance policies and practices are implemented within the Group. In the course of discharging its duties,
the Board acts in good faith, with due diligence and care, and in the best interests of the Group and its
shareholders.
Matters reserved for the Board include;
● Strategy
● Acquisitions and disposals
● Financial reporting and control
● Internal controls
17
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Roles and Functions of the Board (Continued)
Matters reserved for the Board include; (continued)
● Approval of expenditure above specified limits
● Approval of transactions and contracts above specified limits
● Responsibilities for corporate governance
● Board membership and committees
● Approval of changes to capital structure
● Debt financing
Board Meetings
The Board has in place an annual work plan that sets out the scheduled Board meetings. The Board and its
Committees meet regularly in accordance with business requirements. The Board and Board Committee
meetings, workshops and meetings with management, were mainly conducted virtually in 2021 in response
to COVID-19 restrictions.
The Board meets regularly at least four times a year at quarterly intervals and holds additional meetings as
and when the Board thinks appropriate. Seven (7) Board meetings were held during the year 2021.
The Chairman, in conjunction with the Finance Director work closely with the Managing Director to come up
with the annual work plan and an agenda for each meeting. The notice, agenda and detailed board papers
are circulated in advance of the meetings. Directors are entitled to request for additional information where
they consider further information is necessary to support informed decision-making.
The Committee meetings are scheduled around the Board meetings and Board agendas, though they also
meet as and when they think it is appropriate. Committee papers and other appropriate information are
distributed prior to each meeting to allow the Committees to meet its duties.
Directors of the Company play an active role in participating in these meetings through contribution of their
professional opinions and their active participation in discussion. The Chairpersons of the Board Committees
report to each meeting of the Board on the activities of the Committees since the previous Board meeting.
The Board also receives regular reports and presentations from the Managing Director.
Amongst issues deliberated by the Board during the period of review were:
● Updates on the Group’s strategic plan
● Managing Director’s Report which includes review reports on progress against financial objectives,
business developments, as well as investor and external relations, on the environment, performance and
updates on the strategic initiatives.
● Share transactions and top shareholders
● Board Committees Reports
● Quarterly Corporate Social Responsibility reports
● Semi Annual Anti-Bribery Report
● 2022 Budget approval
● Board Evaluation Report
● Training needs review and report
● Operational Grievance Mechanism and report
● Human Rights Impact Assessment report
● Public Relations report
● Corporate Governance matters such as review and approval of the updated board charter, insider
trading policies and approval of the 2021 governance auditor.
The Board also monitors matters arising under the Code of Conduct and the Whistleblower Policy.
18
Kakuzi PlcStatement on Corporate Governance (continued)
For the year ended 31 December 2021
Board Meetings (Continued)
Details of the Board and Board Committee meetings held during the Reporting Period and attendances at
those meetings are set out below:
2021 BOARD & BOARD COMMITTEES MEMBERSHIP AND ATTENDANCE
Director
Classification Designation
Board Audit
and
Risk
Nomination
and
Remuneration
Legal
risk
IHRA
*
Mr
Nicholas
Ng’ang’a
Mr
Christopher
Flowers
Mr Graham
Mclean
Mr Daniel
Ndonye
Mr Stephen
Waruhiu
Mr Andrew
Njoroge
Dr John K
Kimani
Mr Ketan
Shah
Non-Executive Chairman of the
Board
Managing
Director
Executive
Non-Executive
Non-Executive Chairman of the
Audit and Risk
Committee
Non-Executive Chairman of the
Nomination and
Remuneration
Committee
Non-Executive Chairman of the
Legal Risk
Committee
Membership
Attendance
7/7
2/2
Membership
Attendance
Membership
Attendance
Membership
7/7
2/2
2/2
7/7
Attendance
7/7
2/2
Membership
Attendance
7/7
2/2
Membership
Attendance
2/2
7/7
Non-Executive
Executive
Membership
Attendance
Finance Director Membership
Attendance
7/7
7/7
2/2
2/2
1/4
3/4
2/4
2/4
4/4
4/4
2/4
2/4
Advisors Classification Designation
Board Audit
and
Risk
Nomination
and
Remuneration
Professor
Githu
Muigai
Grace
Madoka
Independent
Advisor
Independent
Advisor
Dr Brenda
Achieng
Independent
Advisor
Gina Din
Kariuki
Independent
Advisor
Chairman of the
IHRA*
Committee
Membership
Attendance
Membership
Attendance
Membership
Attendance
Membership
Attendance
Member of the respective committee
3/3
3/3
2/2
3/3
Legal
risk
IHRA
*
2/2
2/2
2/2
1/2
• Where a Director has missed a Board or Board Committee meeting, an acceptable apology had
been received by the Chairman well in advance of the scheduled meeting.
The Managing Director and Finance Director are not members of the Audit and Risk Committee
but attend by invitation
IHRA – Independent Human Rights Advisory
•
*
19
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Director Access to Management and Independent Advisors
Directors receive operating and financial reports of the Group and have access to senior management at
Board and Committee meetings. The Board has the authority to retain, terminate and determine the fees and
terms of consultants, legal counsel and other advisors to the Board as the Board may deem appropriate in its
discretion.
The Group has employed the expertise of external independent consultants, amongst others, as follows:
Oxygene as the Public Relations Consultant.
Triple R Alliance advised on the setting up of the Operational-level Grievance Mechanism (SIKIKA)
IBIS conducted a Human Rights Impact Assessment.
Directors’ external activities and Conflicts of Interest
Directors have a statutory duty to avoid situations in which they have or may have interests that conflict with
those of the Group. The conflict of interest requirements is embedded in the Code of Conduct and Ethics
policy as well as the Directors’ letters of appointment. The Board and Board Committee meetings have a
standing agenda item on the declaration of interest, where members declare actual, potential or perceived
conflicts of interest. The declared items of interest are part of the minutes and are documented in a conflict of
interest register.
The Board is working on operationalizing the Conflict of Interest procedures in place into a formal policy.
Board Policies and Processes
The Board is committed to ensuring that the business is run in a professional, transparent, just and equitable
manner to protect and enhance shareholder value and satisfy the interests of other stakeholders.
The Board has established several processes, policies and procedures to guide the Board and Management
in the implementation of the roles and responsibilities of the Groups business. A summary of the Board
policies and related governance documents include;
Board Charter
This Board Charter recognizes and aims to adopt related best practices and guidance from the provisions of
the Code of Corporate Governance Practices for Issuers of securities to the Public, 2015 (the Code), Kenyan
Companies Act, 2015, the Company's Memorandum and Articles of Association and any applicable law or
regulatory provision. The document is in no way intended to replace or amend the Company's Memorandum
and Articles of Association in any way whatsoever.
The purpose of the Board Charter is to promote the highest standards of Corporate Governance and to set
out the role, composition and responsibilities of the Board of Directors. The Board Charter serves not only as
a reminder of the Board’s roles and responsibilities but also as a general statement of intent and expectation
as to how the Board discharges its duties and responsibilities. The Board Charter which is in the Group’s
website. is periodically reviewed to ensure that it remains current.
Code of Conduct & Ethics
The Group has established a Code of Conduct and Ethics that binds both the Directors and employees. The
Group takes cognizance of the fact that its operations are closely integrated with the local communities and,
because the very nature of agriculture is long-term, it is aware that it can have an impact on the environment.
The Group policy ensures that its activities meet and exceed the social, economic and environmental
expectations of its stakeholders. (https://www.kakuzi.co.ke/company-code-of-conduct-and-ethics).
The Anti-Bribery Policy is in place to foster an environment that encourages ethical behaviour and
compliance, an internal management committee is in place that meets quarterly to monitor this. Their report
is tabled in every other Board meeting.
20
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Code of Conduct & Ethics (continued)
The staff are provided with the code of conduct and ethics upon appointment. Every year The Managing
Director conducts a staff training called “Kakuzi who we are’, highlighting the values and the mission. Every
six months the Anti –Bribery (TABO) report, which also covers Gifts/entertainment, is presented to the
Board. No unethical issues were reported during the course of the year under review.
The Company launched its second ESG report at the Nairobi Securities Exchange in December 2021. This
report covers the key commitments the Company is making to UN SDG’s, the UN Guiding Principles on
Business and Human Rights and highlighting the work being undertaken in key Corporate Social Investment
areas https://www.kakuzi.co.ke/pages/f2cd2b36-26b1-455c-812f-16ae9c139afa/articles/f2cd2b36-26b1-
455c-812f-16ae9c139afa.pdf.
Insider Trading
Internal policy and various laws, regulations and guidelines that regulate the Group’s businesses prohibit
Directors and employees from dealing in the Group's securities when they have price-sensitive information
that is not generally available to the market. Information is considered to be "nonpublic" unless it has been
publicly disclosed, and adequate time has passed for the securities markets to digest the information. The
staff are required to adhere to the internal policy on permissible trading activity.
In every meeting held in 2021, a list of top 10 shareholders was provided as well as any trades (all buyers
and sellers) and transfer transactions. If and when there are any breaches of our internal policy the Board
notifies the Capital Markets Authority.
Related Party Transactions
The Group recognizes that related party transactions arise where there is a relationship by virtue of
shareholding, common shareholding or key management personnel directorship. The Group Transfer Pricing
policy gives guidance on related party transactions, which are carried out using the arm’s length principle. All
transactions with related parties are disclosed in note 27 to the financial statements.
Whistle blowing policy
The Whistleblowing Policy, which is on the Group’s website, (https://www.kakuzi.co.ke/whistle-blowing-
policy) sets out the Board of Directors’, managements’ and staff members’ commitment to upholding the
highest levels of integrity and observance of the rule of law. The policy applies to all employees of the Group,
general public, service providers, customers, company agents, contractors and any other individuals
performing
the Group. The Group website provides an email contact
(confidential@kakuzi.co.ke) to report any fraud, misconduct or wrongdoing by employees, company agents
or executives of the Group. All cases are investigated in a confidential and timely manner, and the required
action taken to ensure feedback is provided as appropriate.
in relation
functions
to
Procurement policy
The purpose Group’s Procurement Policy which is on the website (https://www.kakuzi.co.ke/2cf6-corporate-
governance). is to ensure fairness and transparency in the process of procurement and awarding of tenders,
as far as possible with the ultimate objectives of procuring the required quantity/quality of goods or service at
the most competitive price. The policy gives guidance on the principles and tender procedures. In addition, a
Management Tender Committee oversees the award of tenders.
21
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
ICT policy
The Group has deployed a number of Information Technology (IT) systems and infrastructures for its various
activities and leverages on the systems to achieve its objectives. Appropriate policies are in place to ensure
that systems run smoothly and provide the necessary support to the Group. An IT/Security policy
administered by the IT Manager is in place. It provides guidelines on proper utilisation and safeguarding of
Computer hardware, system, application and proprietary software and communications infrastructure
whether wired or wireless as well as provision of adequate protection and confidentiality of all corporate data.
During the lockdown period due to COVID-19 pandemic the Group ensured business continuity through
remote access of company servers to its staff.
Corporate Social Responsibility (CSR)
The Group has put in place a CSR policy to guide the CSR committee in carrying out its duties. The Board
ensures that funds are allocated annually when the budget is approved.
The Group as part of the community is committed to enhance its community relations by ensuring that it
supports, collaborates and coexists with the community, employees and other stakeholders as a responsible
corporate citizen. Focus areas of our community relations program include but are not limited to economic
empowerment, good health and wellbeing, quality education, clean water and sanitation, environmental
conservation and climate action. The community relations program is conducted through partnerships with
various stakeholders and relevant community linkages.
The CSR Committee reports to the board on a quarterly basis detailing the projects and initiatives taken
each quarter. A highlight of these is contained within the Companies ESG report and on the Company’s web
site.
Operational policies
There are broad operation policies that guide management in executing of the Group’s operations in an
efficient and socially responsible manner. The policies cover various operational functions including: human
resource, financial management, sustainability, environment, safety and health, fire and safety and corporate
affairs among others. Some of the key policies which have been updated in line with the amendments of
applicable legislations and rules as well as the current market practices are available on the Group’s
website, www.kakuzi.co.ke/corporate-governance.
Board Committees
The Board delegates its powers and authorities from time to time to committees in order to ensure the
operational efficiency and specific issues are being handled with relevant expertise. Three Board committees
and one independent advisory committee have been established and each of them has its specific duties
and authorities set out in its own terms of reference which are reviewed from time to time.
Board members have access to all Board Committee meeting papers. Subsequent to each Board Committee
meeting, the minutes are included in the Board papers and presented to the Board by the respective
Committee Chairs.
These Committees have terms of reference approved by the Board, indicating their mandate, authority,
duties, composition and leadership. The appointment of the members to these Committees draws on the
skills and experience of individual Directors.
The Board has constituted its Committees in compliance with the Code. The Committees in place are the
Audit & Risk Committee, the Nomination & Remuneration Committee, the Legal Risk Committee and the
Independent Human Rights Advisory Committee. In addition to the Board committees, the Group has in
place several formally established management committees that deal with particular sets of ongoing issues.
These include the Tender Committee, CSR and Training Committee, among others.
22
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Board Committees (continued)
Management and external service providers and experts attend by invitation as circumstances dictate.
Details of these Committees and Directors’ attendance of these committees is provided on page 19.
Committees Members
Major Functions
Audit and
Risk
Committee
Nomination
and
Remuneration
Committee
• Mr. Daniel M
Ndonye
(Chairperson)
• Mr. Stephen
Waruhiu
• Mr. Andrew
Ndegwa
All the members of
the Audit & Risk
Committee have
the relevant
qualifications and
expertise in audit,
financial
management and
accounting.
• Mr.Stephen
Waruhiu
(Chairperson)
• Mr. Andrew
Ndegwa
• Mr. Christopher
Flowers
• to monitor the financial reporting
process of the Group
• to review the Group’s financial
control, internal control and risk
management systems and
arrangements under the Group’s
whistleblowing policy
Key deliberations during
FY2021
• review of external
auditors 2020 audit
findings report
• review of financial report
for the year ended 31
December 2020
• review of the internal
• to review the effectiveness of
audit reports
• review of the risk map
update reports
• review of the external
auditors service plan for
2021
• review of dividend and
•
press announcement of
interim and year-end
financial results
reviewing the
remuneration policy,
structure and packages
for directors and senior
management
• making
recommendations to the
Board regarding the
directors’ fee and other
allowances for FY2021
and the remuneration
packages of executive
directors
• board evaluation
•
facilitation
training needs review
for the year 2021
• employee satisfaction
survey review
internal audit activities carried out
by the Group’s audit function and
senior management
• to govern the engagement of
external auditor and its
performance
• to review non-audit services
provided by the external auditors.
• to review the structure, size and
composition (including the skills,
knowledge and experience) of the
Board
• annual review of the term limits and
independence of the individual
directors.
• Board evaluation
• induction and continuing
professional development
• review of the committee’s terms of
reference
• to oversee the Board’s succession
planning requirements and identify
qualified individuals and to make
recommendations to the Board on
the appointment or re-appointment
of directors
• to review and recommend to the
Board on the Group’s policy and
structure for remuneration of
directors and on the establishment
of a formal and transparent
procedure for developing policy on
such remuneration
23
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Board Committees (continued)
Committees Members
Major Functions
Legal Risk
Committee
• Mr. Andrew
Ndegwa
(Chairperson)
• Mr. Stephen
Waruhiu
•
•
•
•
•
to understand the nature of any legal
claim or process with Management
and appraise the board on the same
to review any material breaches of
policy which may expose the Group to
a legal risk and advise on adequacy
of the proposed remedial action
to be an integral part of the Group's
Operational-level Grievance
Mechanisms and act as a link
between the OGM panel and the
board
to understand advise the Board on
any future legal risk mitigation
strategy
to review the Group legal audit and
advise the Board on the findings, non-
compliances and required action plan
to remedy such non-compliance
•
•
identifying Human Rights risks to
which the Group is exposed and
recommend to the Board measures to
mitigate these risks, set goals and
evaluate results
reviewing Human rights matters
raised with the Group to be handled in
accordance with the Group Human
Rights policies
•
• Advise the Board on best practices
Independent
Human
Rights
Advisory
Committee
• Professor Githu
•
Muigai
(Chairperson)
• Grace Madoka
• Dr Brenda
Achieng
• Andrew
Ndegwa
• Gina Din
Kariuki
In addition, the
committee has
access to Lady
Justice – Violet
Mavisi an
Independent
Senior Lawyer.
Key deliberations
during FY2021
•
•
review of the IHRAC
Committee members
and recommendation
to the board on the
same
review of the
committee TORs
• oversaw the Group’s
dispute resolution
mechanisms and any
resulting claims and
legal proceedings and
appraised the board
on the progress.
• ensured
implementation of the
Operational-Level
Grievance
Mechanism (OGM) as
approved by the
Board.
review of the
committee TORs
facilitation of the
Operational-level
Grievance
Mechanism
Board Evaluation
The Group recognizes the importance for measuring the effectiveness of the Board through a proper board
evaluation process on a regular basis.
The Nomination and Remuneration Committee is responsible for determining the process for evaluating
Board performance. The Board has taken a progressive step of rolling out board evaluation, in line with the
provisions of the Code. In 2021, the Board engaged an external consultant to conduct the evaluation.
The evaluation covered the performance of the Board of Directors as a whole, peer assessment (individual
members of the Board), Company Secretary, Chairperson, Managing Director and Board Committees. The
process which involved detailed questionnaires, examined the balance of the skills of the directors, the
operation of the Board in practice, including governance issues, and the content of the Board meetings.
24
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Board Evaluation (continued)
The overall result of the board evaluation was positive and all the Board members participated. Feedback
from the process is used to identify opportunities to improve the performance of the Board and the Directors,
and is closely followed up by the Nomination and Remuneration Committee. Some of the areas highlighted
for consideration;
● Gender and social inclusion
● Succession planning policy
● Training on regulatory requirement
● Relationship with the community and stakeholders engagement
Board Induction and Continuous Professional Development
The Nomination and Remuneration Committee is responsible for induction and continuing professional
development programs for directors to develop and maintain the skills and knowledge needed to perform
their role effectively. Newly appointed directors are provided with orientation immediately upon his/her
appointment. They are also provided with information about the role of the Board, each board Committee
and the powers delegated to these Committees and formal introduction to senior management. In the year
2021, there were no new Directors appointed to the Board.
The Company Secretary updates, through the Finance Director, the Board on its duties and responsibilities
and latest developments and changes to the Listing Rules and the applicable legal and regulatory
requirements.
The Directors also visited the Group’s operational facilities in Makuyu during the year in order to meet with
the management and gain better understanding of the business operations.
The Board in their meeting on 18 May 2021 approved the training of Directors for 2021 which was conducted
by external consultants. The training took 12 hours and covered the following topics:
Insider Trading and Data Protection
● Corporate Governance Requirements for Listed Companies
● Directors duties under the Companies Act and capital markets legislation and Kakuzi’s existing policies
● Managing Conflict
●
● Anti-Money Laundering (AML),
● Anti-Bribery and Corruption (ABC)
● Risk Management
●
● Whistleblowing
● The increased importance of Environmental Social and Corporate Governance considerations (ESG) in
International standards and international best practices
the post-COVID 19 world.
● Business sustainability as a function of the board and corporate governance tools to ensure sustainable
and long term planning
Board Remuneration
All aspects of remuneration, including but not limited to Directors’ fees, salaries, benefits-in-kind and short-
term and long-term incentives, options, share-based incentives and awards are overseen by the Nomination
and Remuneration Committee. Directors’ fees are reviewed annually and submitted to shareholders for
approval at each Annual General Meeting.
The remuneration Policy sets guidelines and criteria for the Board’s compensation, attraction and retention of
Directors. The Directors’ remuneration policy and report, including details of their compensation appears on
page 30.
25
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Other Directorships
The Board has clearly determined the maximum number of listed board representations a director may hold.
The Nomination and Remuneration Committee, having reviewed the Directors’ directorships in other
companies, their principal commitments, attendance and contributions to the Group, is satisfied that all
Directors are able to contribute and have adequately performed their duties as Directors of the Group. A
review of the other listed Company Directorships of the Directors indicated that all the Directors have
complied with the Code, which limits the number of Directorships in listed companies a member of the Board
holds at any given time.
Shareholding
The Group files investor returns to meet the continuing obligations as prescribed by the Capital Markets
Authority and the Nairobi Securities Exchange.
Directors interest in the share capital of the Company and the top ten shareholders are listed in the Report of
the Directors on page 12 and page 94 respectively of this Annual report.
Governance Audit
The CMA Code provides that issuers of securities to the public are required to undertake periodic
governance audits. Following extensive stakeholder consultation to consider the frequency, cycle, cost and
scope of governance audits, the Capital Markets Authority (CMA) advised all issuers of a revision in the
cycle of governance audits to at least once every two years with the option of CMA increasing or decreasing
this frequency on a risk-based approach.
In line with the CMA Code, a governance audit has been conducted on the Group for the year ending 31
December 2021 and the report on the Governance auditor is on page 29.
Legal and Compliance Audit
The Group has identified several local and international laws and regulations and performs regular
compliance assessment checks under the various divisions of the Group. A Compliance Register that
identifies the areas of compliance and the level of compliance by the Group is presented to the Board
regularly.
In compliance with the CMA Code of Corporate Governance Practices for Issuers of Securities to the Public,
2015, an internal legal and compliance audit was carried out for the year ended 31 December 2021 with the
objective of ascertaining the level of adherence to applicable laws, regulations and standards. The findings
from the audit which were presented to the Legal Risk Committee confirmed that the Group was generally in
compliance with applicable laws and regulations.
Shareholders Relations and Stakeholder Engagement
The Group is committed to equitable treatment of its shareholders, including the non-controlling and foreign
shareholders. The Group ensures that all shareholders receive full and timely information about its
performance. This is achieved through the distribution of a half-yearly interim financial report and the Annual
Report and financial statements as well as through compliance with the relevant continuing obligations under
the Capital Markets Authority Act. The Group's results are advertised in the press and released to the
securities exchanges within the prescribed period at each half-year and year-end.
The published results and related investor information together with all the relevant information relating to the
Group is available on the Group’s website, www.kakuzi.co.ke/investor-relations/regulatory-news.
26
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Shareholders Relations and Stakeholder Engagement (continued)
The Group has engaged the services of a registrar, Custody & Registrar Services (Kenya) Limited, who
together with the Finance Director, regularly address issues raised by the shareholders. Shareholders’
enquiries, either received by telephone or by email, are properly attended by the registrar.
The Group has put in place community relations policy which is on the Group’s website covering the key
stakeholders. For each of the stakeholders, an effective mode of communication and engagement including
education, informing, engagement and collaboration has been developed with timelines. A number of the
activities conducted have been captured on the Group’s website.
Operational-Level Grievance Mechanism (SIKIKA)
The Operational-level Grievance Mechanism (OGM) provides a systematic and transparent process for
receiving, investigating, and addressing company-related grievances from affected communities, workers,
farmers who supply avocados through Kakuzi’s economic empowerment program, and other relevant
stakeholders.
The overall objective of the OGM is to enhance Kakuzi’s existing processes to respect human rights, to
provide access to remedy through a transparent process of fact finding and respectful dialogue aimed at
mutually agreed outcomes, and to strengthen Kakuzi’s relationships with all its stakeholders. OGM has been
given a local name, SIKIKA, which means “be heard”. Extensive stakeholder engagement has been
undertaken in developing the Company’s OGM as described on the web site.
https://www.kakuzi.co.ke/operational-grievance-mechanism
Annual General Meetings (AGM)
Due to the COVID-19 pandemic and in line with the COVID restrictions, the Group decided in the interests of
the health and safety of shareholders, staff and other stakeholders, to hold the 2021 AGM virtually.
Shareholders were provided with various alternatives to participate in the AGM and were given the right to
ask questions and participate in AGM and to vote for the resolutions.
During the last AGM held on 18 May 2021, the shareholders approved the financial statements for 2021,
Dividend, Directors’ Remuneration Report, re-election of Directors, re-election of the members of the Audit
and Risk Committee, re-appointment of Messrs Deloitte & Touche LLP as Auditors.
Directors’ Responsibilities for Financial Reporting and Disclosures
The Group has maintained timely balanced disclosure of all material information concerning the Group. The
Group publishes on its website (https://www.kakuzi.co.ke/news) key Group information including but not
limited to; Annual reports, ESG reports, financial statements, changes in board composition, Group Notices
and AGM materials, Group Board Charter, Group policies such as the code of ethics, human rights policy,
whistleblowing policy among others.
The Group additionally releases material information to the Capital Markets Authority, the Nairobi Securities
Exchange and any other relevant regulators in line with all disclosure requirements prescribed in the Code
and listing regulations.
A statement of the Directors’ responsibilities in respect of the Annual Report and financial statements is set
out on page 13 of the Annual Report. A statement on going concern is also given within the statement of
corporate governance on page 28 of the Annual Report.
Internal Controls and Risk Management Systems
The Directors acknowledge that they are responsible for maintaining a sound system of internal control.
During the year, the Audit & Risk Committee, on behalf of the Board, reviewed the effectiveness of the
framework of the Group’s system of internal control.
27
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2021
Internal Controls and Risk Management Systems (continued)
Accountability and delegation of authority are clearly defined with regular communication between the Board
and management.
The Group has an Internal Audit Department, which is an independent function that reports directly to the
Audit & Risk Committee and provides independent confirmation on compliance with the Group's business
standards, policies and procedures. Where found necessary, corrective action is recommended.
The performance of each division is continually monitored centrally, including a critical review of annual
budgets, forecasts and monthly sales, profits and cash reports.
Financial results and key business statistics and variances from approved plans are carefully monitored.
The Risk Management Policies, which are reviewed by the Committee, are detailed on Note 4.
External Auditor
To assess the effectiveness of the external audit process, the external auditor is required to report to the
Audit & Risk Committee and confirm their independence in accordance with ethical standards and that they
had maintained appropriate internal safeguards to ensure their independence and objectivity.
In addition to the steps taken by the Board to safeguard auditor objectivity, the Committee has reviewed the
non-audit services provided by the external auditor and satisfied itself that the scale and nature of those
services were such that the external auditors’ objectivity and independence were safeguarded.
The Committee confirms that the Annual Report and Accounts, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Group’s performance,
business model and strategy.
The External Auditors attended the two meetings of the Audit and Risk Committee, one to present their 2020
Audit findings report and the second one to present their audit service plan for the year ended 31 December
2021.
Going Concern
The Board confirms the financial statements are prepared on a going concern basis, and the Directors are
satisfied that the Group has adequate resources to continue in business for the foreseeable future. In
making this assessment, the Directors have considered a wide range of information relating to present and
future conditions, including future projections of profitability, cash flows and capital resources. For this
reason, it continues to adopt the going concern basis when preparing the financial statements.
BY ORDER OF THE BOARD
___________________________
K R SHAH
22 March 2022
_____________________
C J FLOWERS
22 March 2022
28
Kakuzi Plc
Corporate Governance Auditor’s Report
For the year ended 31 December 2021
REPORT OF THE GOVERNANCE AUDITOR’S TO THE BOARD OF DIRECTORS OF KAKUZI PLC
INTRODUCTION
We have carried out a Governance Audit of the Kakuzi PLC covering the year ended 31 December 2021
through which we reviewed the Governance Practices, Structures and Systems put in place by the Board of
Directors.
BOARD RESPONSIBILITY
The Board of Directors is responsible for putting in place governance structures and systems that support
the practice of good governance in The Company. The responsibility includes planning, designing and
maintaining governance structures through policy formulation necessary for efficient and effective
management of The Company. The Board of Directors is responsible for ensuring its proper constitution and
composition; ethical leadership and corporate citizenship; accountability, risk management and internal
control; transparency and disclosure; members’ rights and obligations; members’ relationship; compliance
with laws and regulations; sustainability; and performance management.
GOVERNANCE AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the existence and effectiveness of governance instruments,
policies, structures, systems and practices in the Company within the legal and regulatory framework and in
accordance with best governance practices as envisaged under proper constitution and composition of the
Board of Directors; ethical leadership and corporate citizenship; accountability, risk management and
internal control; transparency and disclosure; members’ rights and obligations; members’ relationship;
compliance with laws and regulations; sustainability; and performance management, based on our audits.
We conducted our audit in accordance with the ICS Governance Audit Standards and Guidelines which
conform to global standards. These standards require that we plan and perform the governance audit to
obtain reasonable assurance on the adequacy and effectiveness of the organizations’ policies, systems,
practices and processes. We believe that our governance audit provides a reasonable basis for our opinion.
OPINION
In our opinion, the Board of Directors of Kakuzi PLC has put in place effective, appropriate and adequate
governance structures within the Company which are in compliance with the legal and regulatory framework
and in line with good governance practices for the interest of stakeholders.
The Governance Auditor engaged in this assignment is Lucy Njoroge, GA/00174.
Lucy Njoroge
Nairobi, Kenya
22 March 2022
29
Kakuzi Plc
Directors’ Remuneration Report
For the year ended 31 December 2021
This report is drawn up in accordance with the Kenyan Companies Act, 2015.
Nomination & Remuneration Committee
Details of the Nomination and Remuneration Committee are set out on page 23.
Policy on Directors Remuneration
The details agreed by the Nomination & Remuneration Committee are as follows:-
To seek to provide remuneration packages that will attract, retain and motivate the right people for the
roles
So far as is practicable, to align the interests of the Executives with those of shareholders
Service Contracts
The Managing Director and the Finance Director are the only Executive Directors of the Company. They
have service contracts with fellow subsidiary companies within the Parent company, Camellia Plc Group,
on rolling service contract basis.
Following the initial appointments, non-executive Directors and the Finance Director may seek re-election
by shareholders on a rotational basis in accordance with the Company’s Articles of Association at Annual
General Meetings. Non-executive Directors do not have service agreements.
Directors’ Remuneration
The following section has been audited:
The Executive Directors’ remuneration (including value of benefits in kind) charged to the Company and
included in the Related Party transactions (Note 27 (ii)) is as follows:-
Managing Director (Mr C J Flowers)
Finance Director (Mr K R Shah)
2021
Shs’000
2020
Shs’000
12,001
16,656
28,657
11,535
17,049
28,584
Directors’ fees are payable after the occurrence of the Board Meetings. The Directors do not receive
any performance based remuneration. Non Executive Directors are not entitled to any pension
contributions.
2021
Directors’
Fees
Shs’000
2020
Directors’
Fees
Shs’000
2021
Benefits in
kind
Shs’000
2020
Benefits in
kind
Shs’000
2021
2020
Total
Shs’000
Total
Shs’000
2,749
5,716
2,987
5,689
7,235
2,749
-
27,125
2,068
2,767
2,052
2,020
2,353
269
-
11,529
-
99
99
99
99
99
-
495
-
89
89
89
89
7
25
388
2,749
5,815
3,086
5,788
7,334
2,848
-
27,620
2,068
2,856
2,141
2,109
2,442
276
25
11,917
Non-Executive
Mr G H Mclean
Mr N Ng’ang’a
Mr D M Ndonye
Mr S N Waruhiu
Mr A N Njoroge
Mr J K Kimani
Mr K W Tarplee
BY ORDER OF THE BOARD
K R SHAH
22 March 2022
C J FLOWERS
22 March 2022
30
Deloitte & Touche LLP
Deloitte Place
Waiyaki Way, Muthangari
P.O. Box 40092 ‐ GPO 00100
Nairobi
Kenya
Tel:
(+254 20) 423 0000
Cell: (+254 20) 0719 039 000
Dropping Zone No. 92
Email: admin@deloitte.co.ke
www.deloitte.com
Independent auditors’ report
To the shareholders of Kakuzi Plc
Report on the audit of the consolidated and separate financial statements
Our Opinion
We have audited the consolidated and separate financial statements of Kakuzi Plc (“the Group”) set out
on pages 35 to 92, which comprise the consolidated and separate statements of financial position at
31 December 2021 and the consolidated and separate statements of profit or loss and other
comprehensive income, consolidated and separate statements of changes in equity and consolidated
and separate statement of cash flows for the year then ended, and notes, including a summary of
significant accounting policies.
In our opinion, the consolidated and separate financial statements give a true and fair view of financial
position of the Group and the Company as at 31 December 2021 and of their financial performance and
cash flows for the year then ended in accordance with International Financial Reporting Standards and
the requirements of the Kenyan Companies Act, 2015.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for Audit of
the consolidated and separate Financial Statements section of our report.
We are independent of the Group and Company in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with other
ethical requirements that are relevant to our audit of the financial statements in Kenya, and we have
fulfilled our ethical responsibilities in accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgement, was of most significance in our audit of
the consolidated and separate financial statements of the current period. The matter was addressed in
the context of our audit of the consolidated and separate financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on the matter.
Opinion
Basis for
Partners: D.M. Mbogho; A.N. Muraya; F. O. Aloo; J. Nyang’aya; B.W. Irungu; I. Karim; F. Okwiri; F.O Omondi; F. Mitambo; P. Seroney; D. Waweru; C Luo.
Deloitte & Touche, a partnership with registration No. 177912, converted to Deloitte & Touche LLP Registration No. LLP-A21DDP effective 14 June 2021
Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited
31
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and separate financial statements (continued)
Key Audit Matter
Measurement of biological assets (in the
consolidated and separate financial
statements)
The measurement of biological assets at the
end of year involves significant judgements and
estimates by the Directors, which could have
material impact on the financial position and the
results of the Group and the Company.
At the end of year, the carrying value of the
biological assets amounted to Sh 1,148,447
(2020: Sh 1,092,933,0) as disclosed in Note 6 in
the
financial
statements.
consolidated and
separate
the
As discussed
financial
in Note 6 of
statements, biological assets comprise forestry
plantations, livestock and growing agricultural
produce on bearer plants, which are measured
at fair value less costs to sell. The fair value
models accrue the additional value related to
the biological asset as biological transformation
takes place rather than at the time of harvest.
As disclosed in Note 3 (a) to the consolidated
and separate financial statements, the key
assumptions and estimates include expected
yield, future market prices, costs to sell and the
age and condition of
the assets. The
these assumptions and
determination of
estimates require careful
the
Directors and any uncertainty could lead to
material adjustments to the consolidated and
separate financial statements.
judgment by
Refer to Note 2 (h) for the accounting policy on
biological assets; Note 3 (a) for the significant
estimates used in determining the fair values of
biological assets; and Note 6, for the disclosure
on biological assets.
How Our Audit Addressed the Key Audit Matter
We focused our attention on the significant assumptions,
estimates and key judgments made by Directors and
Group’s management experts by performing
the
following:
We assessed the competence and objectivity of the
Group's management experts with the responsibility of
determining the valuation of the biological assets. In
addition, we discussed the scope of their work and
reviewed the fair valuation models used for consistency
and mathematical accuracy. We confirmed that the
approach and model used has been consistently applied.
We performed an analysis of the significant assumptions
made in the valuation models and tested them against
available market information. We subjected the key
assumptions to sensitivity analysis.
We assessed the reasonableness of the assumptions
used in deriving the expected yield, the future market
prices and cost to sell.
In addition, we tested a selection of data inputs used
against Directors’ financial and operational information
and external sources, to assess the accuracy, reliability
and completeness thereof.
We checked the consistency of application of the fair
value approaches and models over the years.
We evaluated the sufficiency and accuracy of the
disclosures in the notes of the consolidated and separate
financial statements.
An independent valuer was involved in valuation of
forestry and livestock. We validated the underlying data in
respect of forestry acreage and age of plantations and
the
livestock numbers and classifications used by
the Directors’ operational
independent valuer
independent
including comparison with
historical trends.
to
information,
We found that the models used for the valuation of the
biological assets to be appropriate and reasonable. In
addition, the disclosures in the consolidated and separate
financial statements pertaining to the valuation and
measurement of biological assets were found to be
appropriate.
her information (continued)
Other information
The Directors are responsible for the other information which comprises the Company Information, Notice
of the Annual General Meeting, Minutes of the 93rd Annual General Meeting, Chairman’s Statement,
Report of the Directors, Statement of Directors’ Responsibilities, Statement on Corporate Governance,
Corporate Governance Auditors’ Report, Directors’ Remuneration Report, five year record and major
shareholders and distribution schedule which we obtained prior to the date of this auditor’s report and the
Annual Report, which is expected to be made available to us after that date. The other information does not
include the consolidated and separate financial statements, and our auditor’s report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information
and we do not express an audit opinion or any form of assurance conclusion thereon.
32
pags 27 to 80, which comprise the consolidated and separate statements of financial position at 31 De
In connection with our audit of the consolidated and separate financial statements, our responsibility is to
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and separate financial statements (continued)
In our opinion, the consolidated and separate financial statements give a true and fair view of financial p
Other information (continued)
In connection with our audit of the consolidated and separate financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated and separate financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the
other information that we obtained prior to the date of this auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.IN
DEPE
Responsibilities of the Directors and those charged with governance for the consolidated and
separate financial statements
The Directors are responsible for the preparation and fair presentation of the consolidated and separate
financial statements in accordance with International Financial Reporting Standards and the requirements
of the Kenyan Companies Act, 2015, and for such internal control as the Directors determine are
necessary to enable the preparation of consolidated and separate financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Directors are responsible for
assessing the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group and/or Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the Audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated and separate financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s and the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group and company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the consolidated and separate financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Group and/or company to cease to continue as going concerns.
33
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and separate financial statements (continued)
Auditor's Responsibilities for the Audit of the consolidated and separate financial statements
(continued)
Evaluate the overall presentation, structure and content of the consolidated and separate financial
statements, including the disclosures and whether the consolidated and separate financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Board Audit and Risk Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Board Audit and Risk Committee with a statement that we have complied with the
relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board Audit and Risk Committee, we determine those matters
that were of most significance in the audit of the consolidated and separate financial statements of the
current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on other matters prescribed by the Kenya Companies Act, 2015
Report of the Directors
In our opinion the information given in the Report of the Directors on pages 11 to 12 is consistent with the
consolidated and separate financial statements.
Directors’ Remuneration Report
In our opinion the auditable part of the Director’s Remuneration report on page 30 has been prepared in
accordance with the Kenyan Companies Act, 2015.
The engagement partner responsible for the audit resulting in this independent auditor’s report is
FCPA Anne Muraya, Practising certificate No. 1697
For and on behalf of Deloitte & Touche LLP
Certified Public Accountants (Kenya)
Nairobi
22 March 2022
34
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Consolidated and Separate statement of profit or loss and other comprehensive
income
Year ended 31 December
Notes
2021
Shs’000
2020
Shs’000
Sales
Gains arising from changes in fair value less costs to sell of
non-current biological assets
5
3,296,414
3,608,941
6(i)
138,121
57,813
Cost of sales
Gross profit
Other income
Selling and Distribution costs
Operating profit
Interest income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
3,434,535
(2,428,335)
3,666,754
(2,144,454)
1,006,200
1,522,300
7
45,369
(660,169)
96,912
(851,348)
391,400
767,864
80,189
(33)
79,701
(33)
471,556
847,532
8
8
5
11(a)
(151,820)
(225,498)
319,736
622,034
Items that are not reclassified subsequently to profit or loss:
Remeasurement of post-employment benefit obligations (net of tax)
11(c)
6,038
490
Total comprehensive income for the year
325,774
622,524
Earnings per share (Shs):
Basic and diluted earnings per ordinary share
12
16.31
31.74
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial statements.
35
Kakuzi Plc
Consolidated and Separate Financial Statements
As at 31 December 2021
Consolidated statement of financial position
EQUITY
Share capital
Other reserves
Retained earnings
Proposed dividend
Total equity
Non current liabilities
Deferred income tax
Post employment benefit obligations
Lease obligations
Total equity and non current liabilities
Non current assets
Property, plant and equipment
Biological assets
Right of use assets
Financial assets held at amortised cost
Non current receivables
Current assets
Biological assets – growing agricultural produce
Inventories
Receivables and prepayments
Current tax recoverable
Cash and cash equivalents
Financial assets held at amortised cost
Current liabilities
Payables and accrued expenses
Current tax payable
Lease obligations
Post employment benefit obligations
Notes
13
12(ii)
15
16
17
18
6(i)
19
21
23
6(ii)
22
23
11(d)
25
21
24
11(d)
17
16
31 December
2021
Shs’000
31 December
2020
Shs’000
98,000
37,991
4,972,232
431,200
98,000
31,953
5,083,696
352,800
5,539,423
5,566,449
993,318
77,312
327
1,070,957
1,003,743
76,354
373
1,080,470
6,610,380
6,646,919
2,992,481
793,684
4,286
100,000
38,745
3,929,196
354,763
504,423
342,870
-
1,656,219
100,000
2,958,275
227,494
9,901
135
39,561
277,091
3,021,989
728,163
4,335
200,000
35,555
3,990,042
364,770
435,016
427,200
19,664
1,670,124
-
2,916,774
226,607
-
59
33,231
259,897
Net current assets
2,681,184
2,656,877
6,610,380
6,646,919
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial
statements.
The consolidated and separate financial statements on pages 35 to 92 were approved for issue by the
board of Directors on 22 March 2022 and signed on its behalf by:
K R SHAH
DIRECTOR
C J FLOWERS
DIRECTOR
36
Kakuzi Plc
Consolidated and Separate Financial Statements
As at 31 December 2021
Separate statement of financial position
EQUITY
Share capital
Other reserves
Retained earnings
Proposed dividend
Total equity
Non current liabilities
Deferred income tax
Post employment benefit obligations
Lease obligations
Total equity and non current liabilities
Non current assets
Property, plant and equipment
Biological assets
Right of use assets
Investment in subsidiaries
Financial assets held at amortised cost
Non current receivables
Current assets
Biological assets – growing agricultural produce
Inventories
Receivables and prepayments
Current tax recoverable
Cash and cash equivalents
Financial assets held at amortised cost
Current liabilities
Payables and accrued expenses
Current tax payable
Lease obligations
Post employment benefit obligations
Notes
13
12(ii)
15
16
17
18
6(i)
19
20
21
23
6(ii)
22
23
11(d)
25
21
24
11(d)
17
16
31 December
2021
Shs’000
31 December
2020
Shs’000
98,000
37,991
4,968,091
431,200
98,000
31,953
5,079,555
352,800
5,535,282
5,562,308
993,318
77,312
327
1,070,957
1,003,743
76,354
373
1,080,470
6,606,239
6,642,778
2,992,481
793,684
4,286
4,295
100,000
38,745
3,933,491
354,763
504,423
342,870
-
1,656,219
100,000
2,958,275
235,877
9,954
135
39,561
285,527
3,021,989
728,163
4,335
4,295
200,000
35,555
3,994,337
364,770
435,016
427,200
19,611
1,670,124
-
2,916,721
234,990
-
59
33,231
268,280
Net current assets
2,672,748
2,648,441
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial
statements.
The consolidated and separate financial statements on pages 35 to 92 were approved for issue by the
board of Directors on 22 March 2022 and signed on its behalf by:
6,606,239
6,642,778
K R SHAH
DIRECTOR
C J FLOWERS
DIRECTOR
37
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Consolidated statement of changes in equity
Year ended 31 December 2021
Share
capital
Shs’000
Other
reserves
Shs’000
Retained
earnings
Shs’000
Proposed
dividend
Shs’000
Total
equity
Shs’000
At start of year
98,000
31,953
5,083,696
352,800
5,566,449
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final paid for 2020
- Proposed for 2021
Total
At end of year
Year ended 31 December 2020
-
-
-
-
-
-
-
6,038
319,736
-
6,038
319,736
-
-
-
319,736
6,038
325,774
-
-
-
-
(431,200)
(352,800)
431,200
(352,800)
-
(431,200)
78,400
(352,800)
98,000
37,991
4,972,232
431,200
5,539,423
At start of year
98,000
31,463
4,814,462
274,400
5,218,325
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final paid for 2019
- Proposed for 2020
Total
At end of year
-
-
-
-
-
-
-
490
490
622,034
-
622,034
-
-
-
622,034
490
622,524
-
-
-
-
(352,800)
(274,400)
352,800
(274,400)
-
(352,800)
78,400
(274,400)
98,000
31,953
5,083,696
352,800
5,566,449
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial statements.
Other reserves relate to remeasurement of post-employment benefit obligations arising from experience
adjustments and changes in actuarial assumptions.
38
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Separate statement of changes in equity
Year ended 31 December 2021
Share
capital
Shs’000
Other
reserves
Shs’000
Retained
earnings
Shs’000
Proposed
dividend
Shs’000
Total
equity
Shs’000
At start of year
98,000
31,953
5,079,555
352,800
5,562,308
Total comprehensive income for the
year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final paid for 2020
- Proposed for 2021
Total
At end of year
Year ended 31 December 2020
-
-
-
-
-
-
-
6,038
319,736
-
6,038
319,736
-
-
-
319,736
6,038
325,774
-
-
-
-
(431,200)
(352,800)
431,200
(352,800)
-
(431,200)
78,400
(352,800)
98,000
37,991
4,968,091
431,200
5,535,282
At start of year
98,000
31,463
4,810,321
274,400
5,214,184
Total comprehensive income for the
year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final paid for 2019
- Proposed for 2020
Total
At end of year
-
-
-
-
-
-
-
490
622,034
-
490
622,034
-
-
-
622,034
490
622,524
-
-
-
-
(352,800)
(274,400)
352,800
(274,400)
-
(352,800)
78,400
(274,400)
98,000
31,953
5,079,555
352,800
5,562,308
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial
statements.
Other reserves relate to remeasurement of post-employment benefit obligations arising from experience
adjustments and changes in actuarial assumptions.
39
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Consolidated and separate statement of cash flows
Operating activities
Cash generated from operations
Interest received
Income tax paid
Notes
Year ended 31 December
2020
Shs’000
2020
Shs’000
26
8
11(d)
611,875
80,189
(135,268 )
670,704
79,701
(209,150 )
Net cash generated from operating activities
556,796
541,255
Investing activities
Purchase of property, plant and equipment
Purchase and development of biological assets
Proceeds from disposal of property, plant and equipment
18
6(i)
(218,694 )
(17,305 )
2,103
(348,979 )
(17,439 )
8,212
Net cash used in investing activities
(233,896 )
(358,206 )
Financing activities
Dividend paid
Lease payments
17
(352,800 )
(3 )
(274,400 )
(13 )
Net cash used in financing activities
(352,803 )
(274,413 )
Net decrease in cash and cash equivalents
(29,903 )
(91,364 )
Movement in cash and cash equivalents
At start of year
Net decrease in cash and cash equivalents
Effect of exchange rate differences on cash and cash
equivalents
1,670,124
(29,903 )
1,696,130
(91,364 )
7
15,998
65,358
At end of year
25
1,656,219
1,670,124
The notes on pages 41 to 92 are an integral part of these consolidated and separate financial
statements.
40
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements
1 General information
Kakuzi Plc is incorporated in Kenya under the Kenyan Companies Act, 2015 as a public limited
liability company, and is domiciled in Kenya. The address of its registered office is:
Main Office
Punda Milia Road, Makuyu
P O Box 24
01000 THIKA
Kenya
The Company’s ordinary shares are listed on the Nairobi Securities Exchange and the London
Stock Exchange.
For Kenyan Companies Act, 2015 reporting purposes, the balance sheet is represented by the
statement of financial position and the profit or loss by the statement of profit or loss and other
comprehensive income, in these consolidated and separate financial statements.
Reference to, “the Group,” in the consolidated and separate financial statements covers the
separate Company financial statements as well. The principal activities of the Group comprise:
growing, packing and selling of avocados
growing, cracking and selling of macadamia nuts
the cultivation and sale of tea green leaf
forestry development & sale of forestry products
Livestock farming, animal feed and sale of beef
Growing, packing and selling of blueberries
2 Accounting policies
The principal accounting policies applied in the preparation of these consolidated and separate
financial statements are set out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
(a) Statement of compliance
The consolidated and separate financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The measurement basis applied is the
historical cost basis, except where otherwise stated in the accounting policies below. The
consolidated and separate financial statements are presented in Kenya Shillings (Shs), rounded
to the nearest thousand.
The preparation of the consolidated and separate financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires the Directors to
exercise judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or where assumptions and estimates are
significant to the consolidated and separate financial statements, are disclosed in Note 3.
(b) Adoption of new and revised International Financial Reporting Standards (IFRS)
(i) Relevant new standards and amendments to published standards effective for the
year ended 31 December 2021
Several new and revised standards and interpretations became effective during the year.
The Directors have evaluated the impact of the new standards and interpretations and none
of them had a significant impact on the Group’s financial statements.
41
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2
Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS)
(continued)
(i) Relevant new standards and amendments to published standards effective for the
year ended 31 December 2021 (continued)
The following revised IFRSs were effective in the current year and the nature and the impact
of the relevant amendments are described below.
Impact of the initial application of Interest Rate Benchmark Reform
In the prior year, the Phase 1 amendments Interest Rate Benchmark Reform—Amendments
to IFRS 9/IAS 39 and IFRS 7 came into effect. These amendments modify specific hedge
accounting requirements to allow hedge accounting to continue for affected hedges during
the period of uncertainty before the hedged items or hedging instruments are amended as a
result of the interest rate benchmark reform.
The Phase 2 amendments Interest Rate Benchmark Reform—Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16. Adopting these amendments enables the Group to reflect
the effects of transitioning from interbank offered rates (IBOR) to alternative benchmark
interest rates (also referred to as ‘risk free rates’ or RFRs) without giving rise to accounting
impacts that would not provide useful information to users of financial statements.
Both the Phase 1 and Phase 2 amendments are not relevant to the Group.
Impact of the initial application of COVID-19-Related Rent Concessions beyond 30
June 2021—Amendmends to IFRS 16
In the prior year, Covid-19-Related Rent Concessions (Amendment to IFRS 16) that provided
practical relief to lessees in accounting for rent concessions occurring as a direct
consequence of COVID-19, by introducing a practical expedient to IFRS 16 was amended.
This practical expedient was available to rent concessions for which any reduction in lease
payments affected payments originally due on or before 30 June 2021.
In March 2021, the Board issued Covid-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16) that extends the practical expedient to apply to reduction in lease
payments originally due on or before 30 June 2022.
The practical expedient permits a lessee to elect not to assess whether a COVID-19-related
rent concession is a lease modification. A lessee that makes this election shall account for
any change in lease payments resulting from the COVID-19-related rent concession applying
IFRS 16 as if the change were not a lease modification.
The practical expedient applies only to rent concessions occurring as a direct consequence
of COVID-19 and only if all of the following conditions are met:
•
•
•
•
The change in lease payments results in revised consideration for the lease that is
substantially the same as, or less than, the consideration for the lease immediately
preceding the change
Any reduction in lease payments affects only payments originally due on or before 30
June 2022 (a rent concession meets this condition if it results in reduced lease
payments on or before 30 June 2022 and increased lease payments that extend
beyond 30 June 2022)
There is no substantive change to other terms and conditions of the lease
Impact on accounting for changes in lease payments applying the exemption
The amendments are not applicable to the Group in the current year.
42
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS) (continued)
(ii) Impact of new and amended standards and interpretations in issue but not yet effective
At the date of authorization of these financial statements, the Group has not yet applied the
following new and revised IFRS Standards that have been issued but are not yet effective.
New and Amendments to standards
Amendments to IAS 10 and IAS 28 – Sale contribution
of assets between Investor and its Associate or Joint
Venture
Annual Improvements to IFRS Standards 2018-2020
Cycle - Amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards, IFRS 9
Financial Instruments, IFRS 16 Leases, and IAS 41
Agriculture
IFRS 17 - insurance contracts
Amendments to IAS 1 -Classification of Liabilities as
Current or Non-current
Amendments to IFRS 3 - Reference to the Conceptual
Framework
Amendments to IFRS 16 - Property, Plant and Equipment
– Proceeds before Intended Use
Amendments to IAS 37 - Onerous Contracts – Cost of
Fulfilling a Contract
Amendments to IAS 1 and IFRS Practice Statement 2
Disclosure of Accounting Policies
Amendments to IAS 8 - Definition of Accounting
Estimates
Amendments to IAS 12 - Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
Effective for annual periods
beginning on or after
Yet to be set, however earlier
application permitted
Annual periods beginning on or after
1 January 2022
Annual periods beginning on or after
1 January 2023
Annual periods beginning on or after
1 January 2023
Annual periods beginning on or after
1 January 2022
Annual periods beginning on or after
1 January 2022
Annual periods beginning on or after
1 January 2022
Annual periods beginning on or after
1 January 2023
Annual periods beginning on or after
1 January 2023
Annual periods beginning on or after
1 January 2023
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution
of assets between an investor and its associate or joint venture. Specifically, the amendments
state that gains or losses resulting from the loss of control of a subsidiary that does not contain a
business in a transaction with an associate or a joint venture that is accounted for using the
equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated
investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the
remeasurement of investments retained in any former subsidiary (that has become an associate
or a joint venture that is accounted for using the equity method) to fair value are recognised in the
former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new
associate or joint venture.
The effective date of the amendments has yet to be set by the Board; however, earlier application
of the amendments is permitted. The directors of the Group anticipate that the application of
these amendments may have an impact on the Group's consolidated financial statements in
future periods should such transactions arise.
43
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS) (continued)
(ii) Impact of new and amended standards and interpretations in issue but not yet effective
(continued)
Annual Improvements to IFRS Standards 2018–2020
The Annual Improvements include amendments to four Standards.
IFRS 1 First-time Adoption of International Financial Reporting Standards
The amendment provides additional relief to a subsidiary which becomes a first-time adopter
later than its parent in respect of accounting for cumulative translation differences. As a result of
the amendment, a subsidiary that uses the exemption in IFRS 1:D16(a) can now also elect to
measure cumulative translation differences for all foreign operations at the carrying amount that
would be included in the parent’s consolidated financial statements, based on the parent’s date
of transition to IFRS Standards, if no adjustments were made for consolidation procedures and
for the effects of the business combination in which the parent acquired the subsidiary. A similar
election is available to an associate or joint venture that uses the exemption in IFRS 1:D16(a).
The amendment is effective for annual periods beginning on or after 1 January 2022, with early
application permitted.
IFRS 16 Leases
The amendment removes the illustration of the reimbursement of leasehold improvements.
As the amendment to IFRS 16 only regards an illustrative example, no effective date is stated.
IAS 41 Agriculture
The amendment removes the requirement in IAS 41 for entities to exclude cash flows for
taxation when measuring fair value. This aligns the fair value measurement in IAS 41 with the
requirements of IFRS 13 Fair Value Measurement to use internally consistent cash flows and
discount rates and enables preparers to determine whether to use pretax or post-tax cash flows
and discount rates for the most appropriate fair value measurement.
The amendment is applied prospectively, i.e. for fair value measurements on or after the date an
entity initially applies the amendment.
The amendment is effective for annual periods beginning on or after 1 January 2022, with early
application permitted.
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in
the statement of financial position and not the amount or timing of recognition of any asset,
liability, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on
rights that are in existence at the end of the reporting period, specify that classification is
unaffected by expectations about whether an entity will exercise its right to defer settlement of a
liability, explain that rights are in existence if covenants are complied with at the end of the
reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to
the transfer to the counterparty of cash, equity instruments, other assets or services.
The amendments are applied retrospectively for annual periods beginning on or after 1 January
2023, with early application permitted.
44
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS) (continued)
(ii) Impact of new and amended standards and interpretations in issue but not yet effective
(continued)
Amendments to IFRS 3 business combinations – Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of
the 1989 Framework. They also add to IFRS 3 a requirement that, for obligations within the scope
of IAS 37, an acquirer applies IAS 37 to determine whether at the acquisition date a present
obligation exists as a result of past events. For a levy that would be within the scope of IFRIC 21
Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to
a liability to pay the levy has occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognise contingent
assets acquired in a business combination.
The amendments are effective for business combinations for which the date of acquisition is on
or after the beginning of the first annual period beginning on or after 1 January 2022. Early
application is permitted if an entity also applies all other updated references (published together
with the updated Conceptual Framework) at the same time or earlier.
Amendments to IAS 16 – Property, Plant and Equipment—Proceeds before Intended Use
The amendments prohibit deducting from the cost of an item of property, plant and equipment
any proceeds from selling items produced before that asset is available for use, i.e. proceeds
while bringing the asset to the location and condition necessary for it to be capable of operating in
the manner intended by management. Consequently, an entity recognises such sales proceeds
and related costs in profit or loss. The entity measures the cost of those items in accordance with
IAS 2 Inventories.
The amendments also clarify the meaning of ‘testing whether an asset is functioning properly’.
IAS 16 now specifies this as assessing whether the technical and physical performance of the
asset is such that it is capable of being used in the production or supply of goods or services, for
rental to others, or for administrative purposes. If not presented separately in the statement of
comprehensive income, the financial statements shall disclose the amounts of proceeds and cost
included in profit or loss that relate to items produced that are not an output of the entity’s
ordinary activities, and which line item(s) in the statement of comprehensive income include(s)
such proceeds and cost.
The amendments are applied retrospectively, but only to items of property, plant and equipment
that are brought to the location and condition necessary for them to be capable of operating in the
manner intended by management on or after the beginning of the earliest period presented in the
financial statements in which the entity first applies the amendments.
The entity shall recognise the cumulative effect of initially applying the amendments as an
adjustment to the opening balance of retained earnings (or other component of equity, as
appropriate) at the beginning of that earliest period presented.
The amendments are effective for annual periods beginning on or after 1 January 2022, with
early application permitted.
45
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS) (continued)
(ii) Impact of new and amended standards and interpretations in issue but not yet effective
(continued)
Amendments to IAS 37 – Onerous Contracts—Cost of Fulfilling a Contract
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate
directly to the contract’. Costs that relate directly to a contract consist of both the incremental
costs of fulfilling that contract (examples would be direct labour or materials) and an allocation of
other costs that relate directly to fulfilling contracts (an example would be the allocation of the
depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at
the beginning of the annual reporting period in which the entity first applies the amendments.
Comparatives are not restated. Instead, the entity shall recognise the cumulative effect of initially
applying the amendments as an adjustment to the opening balance of retained earnings or other
component of equity, as appropriate, at the date of initial application.
The amendments are effective for annual periods beginning on or after 1 January 2022, with
early application permitted.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2
Making Materiality Judgements—Disclosure of Accounting Policies
The amendments change the requirements in IAS 1 with regard to disclosure of accounting
policies. The amendments replace all instances of the term ‘significant accounting policies’ with
‘material accounting policy information’. Accounting policy information is material if, when
considered together with other information included in an entity’s financial statements, it can
reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy
information that relates to immaterial transactions, other events or conditions is immaterial and
need not be disclosed. Accounting policy information may be material because of the nature of
the related transactions, other events or conditions, even if the amounts are immaterial. However,
not all accounting policy information relating to material transactions, other events or conditions is
itself material.
The Board has also developed guidance and examples to explain and demonstrate the
application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.
The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2023,
with earlier application permitted and are applied prospectively. The amendments to IFRS
Practice Statement 2 do not contain an effective date or transition requirements.
Amendments to IAS 8—Definition of Accounting Estimates
The amendments replace the definition of a change in accounting estimates with a definition of
accounting estimates. Under the new definition, accounting estimates are “monetary amounts in
financial statements that are subject to measurement uncertainty”.
The definition of a change in accounting estimates was deleted. However, the Board retained the
concept of changes in accounting estimates in the Standard with the following clarifications:
A change in accounting estimate that results from new information or new developments is
not the correction of an error
46
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(b) Adoption of new and revised International Financial Reporting Standards (IFRS) (continued)
(ii) Impact of new and amended standards and interpretations in issue but not yet effective
(continued)
Amendments to IAS 8—Definition of Accounting Estimates (Continued)
The effects of a change in an input or a measurement technique used to develop an
accounting estimate are changes in accounting estimates if they do not result from the
correction of prior period errors
The Board added two examples (Examples 4-5) to the Guidance on implementing IAS 8, which
accompanies the Standard. The Board has deleted one example (Example 3) as it could cause
confusion in light of the amendments.
The amendments are effective for annual periods beginning on or after 1 January 2023 to
changes in accounting policies and changes in accounting estimates that occur on or after the
beginning of that period, with earlier application permitted.
Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction
The amendments introduce a further exception from the initial recognition exemption. Under the
amendments,an entity does not apply the initial recognition exemption for transactions that give
rise to equal taxable and deductible temporary differences.
Depending on the applicable tax law, equal taxable and deductible temporary differences may
arise on initial recognition of an asset and liability in a transaction that is not a business
combination and affects neither accounting nor taxable profit. For example, this may arise upon
recognition of a lease liability and the corresponding right-of-use asset applying IFRS 16 at the
commencement date of a lease.
Following the amendments to IAS 12, an entity is required to recognise the related deferred tax
asset and liability, with the recognition of any deferred tax asset being subject to the
recoverability criteria in IAS 12.
The Board also adds an illustrative example to IAS 12 that explains how the amendments are
applied.
The amendments apply to transactions that occur on or after the beginning of the earliest
comparative period presented. In addition, at the beginning of the earliest comparative period an
entity recognises:
• A deferred tax asset (to the extent that it is probable that taxable profit will be available against
which the deductible temporary difference can be utilised) and a deferred tax liability for all
deductible and taxable temporary differences associated with:
– Right-of-use assets and lease liabilities
– Decommissioning, restoration and similar liabilities and the corresponding amounts
recognised as part of the cost of the related asset
• The cumulative effect of initially applying the amendments as an adjustment to the opening
balance of retained earnings (or other component of equity, as appropriate) at that date The
amendments are effective for annual reporting periods beginning on or after 1 January 2023,
with earlier application permitted.
(iii) Early adoption of standards
The Group did not early-adopt any new or amended standards in the year ended 31 December
2021.
47
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(c) Consolidation of subsidiaries
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and
its subsidiaries. Control is achieved when the Company:
has power over the investee;
has the ability to use its power to affect its returns.
is exposed, or has rights, to variable returns from its involvement with the investee; and
The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over
the investee when the voting rights are sufficient to give it the practical ability to direct the
relevant activities of the investee unilaterally. The Company considers all relevant facts and
circumstances in assessing whether or not the Company’s voting rights in an investee are
sufficient to give it power, including:
the size of the Company’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
rights arising from other contractual arrangements; and
potential voting rights held by the Company, other vote holders or other parties;
any additional facts and circumstances that indicate that the Company has, or does not
have, the current ability to direct the relevant activities at the time that decisions need to be
made, including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary. Specifically, income and expenses of
a subsidiary acquired or disposed of during the year are included in the consolidated statement of
profit or loss and other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of
the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
(d) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Directors as the chief operating decision makers, who are responsible for allocating resources and
assessing performance of the operating segments and making strategic decisions.
(e) Revenue recognition
(i) The Group recognises revenue mainly from sale of agricultural produce to the export and
local markets. Revenue is shown net of value added tax (VAT), returns, rebates and
discounts.
Revenue is measured based on the consideration to which the Group expects to be entitled
in a contract with a customer and excludes amounts collected on behalf of third parties. The
Group recognises revenue when it transfers control of a product or service to a customer.
48
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(e) Revenue recognition (continued)
For the sale of agricultural produce to the export market, revenue is recognised when control of
the agricultural produce has been transferred to the final customer by selling agents. A receivable
is recognised by the Group upon the agents confirming that the agricultural produce has been
delivered to the final customer as this represents the point at which the right to consideration
becomes unconditional.
For the sale of agricultural produce to the local market, revenue is recognised when control of the
agricultural produce has transferred, being at the point the customer purchases the goods at the
retail outlet or the agricultural produce is delivered to the customer. Payment is due immediately
at the point the customer takes control of the agricultural produce.
Under the Group’s standard contract terms, customers do not have a right to return due to the
nature of the agricultural produce.
Payment with respect to revenue from agricultural produce is typically due upon acceptance of
the products. Contracts with customers do not have a significant financing component and there
are no variable considerations.
(ii) The cost of sales is the accumulated total of all costs used to create our products which
have been sold. The various costs of sales fall into the general sub-categories of direct
labor, direct materials, depreciation and overheads. The cost of sales does not include
selling and distribution expenses.
(f) Functional currency and translation of foreign currencies
(i) Functional and presentation currency
Items included in the consolidated and separate financial statements are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). The financial statements are presented in Kenyan Shillings which is the consolidated
and separate functional currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency of the respective entity
using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement of comprehensive income within ‘interest income or finance
costs’.
(g) Property, plant and equipment
All categories of property, plant and equipment are initially recorded at historical cost and subsequently
stated at cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. A bearer plant is defined as a plant that:
(a) is used in the production or supply of agricultural produce;
(b) is expected to bear produce for more than one period; and
(c) has a remote likelihood of being sold as agricultural produce, except to scrap sales.
49
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(g) Property, plant and equipment (continued)
On adoption of amended IAS16 issued in 2016 that became effective in January 2016, the fair value
of existing bearer plants was derived as the cost, thereafter the cost of new bearer plants includes,
cost of seedlings, plants and maintaining the bushes until when they become commercial viable.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group or Company and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement within ‘cost of production’ during the financial
period in which they are incurred.
Bearer plants that are immature are classified as capital work in progress until the produce can be
commercially harvested. At that point they are reclassified to bearer plants and depreciation
commences. The periods which are considered immature are based on actual biological
transformation. Immature plantations are measured at accumulated cost. The accumulated costs
relate to cost of seedlings, planting & maintenance of the immature fields until the biological
transformation is complete.
Freehold land is not depreciated. Depreciation on other assets is calculated using the straight line
method to write cost to their residual values over their estimated useful life as follows:
Buildings, dams and improvements
Plant and machinery
Motor vehicles, tractors, trailers & implements
Furniture, fittings and equipment
Bearer plants:
- Avocado trees
- Macadamia trees
- Blueberries
- Tea bushes
Capital work in progress is not depreciated
Immature
period
Estimated useful life
20 – 50 years
10 – 13 years
4 – 10 years
3 – 8 years
25 years
30 years
5 years
50 years
4 years
6 years
1 year
4 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
reporting date.
Property, plant and equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised in the statement of profit or loss for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units).
Gains and losses on disposal of property, plant and equipment are determined by reference to
their carrying amounts and are taken into account in determining operating profit.
50
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(h) Biological assets
Biological assets comprise forestry, livestock and growing agricultural produce on tea, avocado,
blueberries and macadamia plantations.
Biological assets are measured on initial recognition at cost and subsequently at fair value less costs
to sell at each reporting date. Any gains or losses arising on initial recognition of biological assets and
from subsequent changes in fair value less costs to sell are recognised in the profit or loss in the year
in which they arise.
The fair value of livestock is determined based on market prices of livestock of similar age, breed and
genetic merit.
The tea bushes, avocado and macadamia trees, and blueberries crops are bearer plants and are
therefore presented and accounted for as property, plant and equipment (see note 2(g)). However,
the produce growing on these trees is accounted for as biological assets until the point of harvest.
Harvested produce is transferred to inventory at fair value less costs to sell.
Management has assessed the fair value of growing agricultural produce on avocado, macadamia,
blueberries and tea plantations using estimated market prices less costs to sell based on the
biological transformation of the produce at the reporting date.
The fair value of timber plantations and livestock is based on market prices as valued by external
independent valuers.
Purchases and development of biological assets include cost of planting, breeding and upkeep until
they mature.
Subsequently all costs of upkeep and maintenance of mature biological assets are recognised as an
expense through profit or loss under cost of sales in the period in which they are incurred.
(i) Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The
Group recognises a right of use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be
readily determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprises of fixed lease
payments (including the substance fixed payments), less any lease incentives.
The lease liability is presented as a separate line in the statement of financial position. The lease
liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method and by reducing the carrying amount to reflect the lease
payments made.
The Group re-measures the lease liability (and makes a corresponding adjustment to the related
right-of-use asset) whenever:
the lease term has changed or there is a change in the assessment of exercise of a purchase
option, in which case the lease liability is remeasured by discounting the revised lease payments
using a revised discount rate.
51
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(i) Leases (continued)
the lease payments change due to changes in an index or rate or a change in expected
payment under a guaranteed residual value, in which cases the lease liability is remeasured
by discounting the revised lease payments using the initial discount rate (unless the lease
payments change is due to a change in floating interest rate, in which case a revised discount
rate is used).
a lease contract is modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment loses.
Right-of-use assets are depreciated over the shorter of the period of lease term and useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-
use asset reflects that the Group expects to exercise a purchase option, the related right-of-use
asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The right-of-use assets are presented as a separate line in the statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for
any identified impairment loss as described in the ‘Property, plant and equipment’ policy.
Variable rents that do not depend on an index or rate are not included in the measurement of the
lease liability and the right-of-use asset. The related payments are recognised as an expense in the
period in which the event or condition that triggers those payments occurs and are included in the
statement of the profit or loss.
The Group as lessor
The Group enters into lease agreements as a lessor with respect to some of its buildings which
comprise less than 1% of total buildings.
Leases for which the Group is a lessor are classified as operating leases. Whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised on a straight-line basis over the lease
term.
(j) Inventories
Inventories are stated at the lower of cost and net realisable value.
Agricultural produce at the point of harvest is measured at fair value less costs to sell. Any changes
arising on initial recognition of agricultural produce at fair value less costs to sell are recognised in the
statement of comprehensive income in the year in which they arise.
The cost of other inventory is determined by the weighted average method. Net realisable value is the
estimate of the selling price in the ordinary course of business, less the costs of completion and selling
expenses.
Provisions for obsolete, damaged and unusable inventories are made based on inventory aged
listings.
52
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2
Accounting policies (continued)
(k) Payables
Payables are obligations to pay for goods and services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
(l) Share capital
Ordinary shares are classified as equity.
(m) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks and other short
term highly liquid investments with original maturities of three months or less.
(n) Financial instruments
Financial assets and financial liabilities are recognised on the consolidated and separate statement
of financial position when the Group becomes a party to the contractual provisions of the
instrument.
Treasury bonds
The treasury bonds held by the Group are classified at amortised cost when they meet the
following criteria:
the financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in
the ordinary course of business. If collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are a classified as current assets. If not, they are
presented as non-current assets.
Receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method less provision for impairment. A provision for impairment of
receivables is established using an Expected Credit Losses (“ECL”) model in line with the
requirements of IFRS 9 as outlined in the next section below. The amount of the provision is the
difference between the carrying amount and the present value of estimated future cash flows,
discounted at the effective interest rate. The amount of the provision is charged to profit or loss.
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument
and of allocating interest income over the relevant period.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt
instruments that are measured at amortised cost or at fair value through other comprehensive
Income (“FVTOCI”), lease receivables, trade receivables and contract assets. The amount of
expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
53
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(n) Financial instruments (continued)
Impairment of financial assets (continued)
The Group always recognises lifetime ECL for trade receivables, contract assets and lease
receivables. The expected credit losses on these financial assets are estimated using a provision
matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific
to the debtors, general economic conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including time value of money where
appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a
significant increase in credit risk since initial recognition. However, if the credit risk on the financial
instrument has not increased significantly since initial recognition, the Company measures the loss
allowance for that financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events
over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of
lifetime ECL that is expected to result from default events on a financial instrument that are
possible within 12 months after the reporting date.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since
initial recognition, the Group compares the risk of a default occurring on the financial
instrument at the reporting date with the risk of a default occurring on the financial instrument
at the date of initial recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and supportable, including historical
experience and forward‑ looking information that is available without undue cost or effort.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk
management purposes as historical experience indicates that financial assets that meet either
of the following criteria are generally not recoverable:
when there is a breach of financial covenants by the debtor; or
information developed internally or obtained from external sources indicates that the debtor
is unlikely to pay its creditors, including the Group, in full (without taking into account any
collateral held by the Group).
Irrespective of the above analysis, the Group considers that default has occurred when a
financial asset is more than 90 days past the due date unless the Group has reasonable and
supportable information to demonstrate that a more lagging default criterion is more
appropriate.
The Group write-offs debt only when there is objective evidence that the debt will not be
recovered and after it has exhausted its collection avenues.
(iii) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss
given default (i.e. the magnitude of the loss if there is a default) and the exposure at default.
The assessment of the probability of default and loss given default is based on historical data
adjusted by forward‑ looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross
carrying amount at the reporting date.
54
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(n) Financial instruments (continued)
(iii) Measurement and recognition of expected credit losses (continued)
For financial assets, the expected credit loss is estimated as the difference between all
contractual cash flows that are due to the Group in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at the original effective
interest rate.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments
with a corresponding adjustment to their carrying amount through a loss allowance account.
(i) Interest income is recognised on a time proportion basis using the effective interest
method.
(ii) Dividends are recognised as income in the period in which the right to receive payment is
established.
(o) Employee benefits
(i) Post employment benefits obligations
For unionised employees, the group has an unfunded obligation to pay terminal gratuities under its
Collective Bargaining Agreements with the union. Employees who resign/retire after completing at
least ten years (Nandi Hills employees) or employees who retire/resign and have completed at
least five years (Makuyu employees) of service are entitled to twenty one days pay (Nandi Hills
employees) or nineteen days (Makuyu employees) for each completed year of service
respectively.
The liability recognised in the statement of financial position in respect of this defined benefit
scheme is the present value of the defined benefit obligation at the reporting date. The
obligation is estimated annually using the projected unit credit method by independent
actuaries. The present value is determined by discounting the estimated future cash outflows
using interest rates of government bonds. The currency and estimated term of these bonds is
consistent with the currency and estimated term of the post-employment benefit obligation. The
obligation relating to employees who have reached the minimum retirement age and completed
the required years of service and are still in employment are classified as payable within the
next twelve months.
Remeasurement of post employment benefit obligations arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in other comprehensive
income in the period in which they arise.
The Group operates a defined contribution post-employment benefit scheme for management
employees. A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive obligations to pay
further contributions if the fund does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior periods.
The assets of the defined contribution post-employment benefit scheme are held in a separate
trustee administered fund, which is funded by contributions from both the Group and the
employees. The Group and all its employees also contribute to the statutory National Social
Security Fund, which is a defined contribution scheme.
The Group’s contributions to both these defined contribution schemes are charged to the
statement of profit or loss within ‘cost of production’ in the year in which they fall due.
(ii) Other entitlements
The estimated monetary liability for employees’ accrued annual leave entitlement at the
reporting date is recognised as an expense accrual.
55
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(p) Current and deferred income tax
The tax expense for the period comprises current and deferred income tax. Tax is recognised in the
statement of profit or loss except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity respectively.
A provision is recognised for those matters for which the tax determination is uncertain but it is
considered probable that there will be a future outflow of funds to a tax authority. The provisions are
measured at the best estimate of the amount expected to become payable. The assessment is based
on the judgement of tax professionals within the Group supported by previous experience in respect of
such activities and in certain cases based on specialist independent tax advice.The Group considers
each uncertain tax treatment separately or together with one or more other uncertain tax treatments
based on which approach better predicts the resolution of uncertainty. Due to uncertainity associated
with such tax items, there is a possibility that on conclusion of open tax matters at a future date, the
final outcome may differ differently.
(i) Current income tax
The current income tax charge is calculated on the basis of the tax enacted or substantively enacted
at the reporting date. Directors periodically evaluate positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.
(ii) Deferred income tax
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying values in the financial
statements. Deferred income tax is determined using tax rates and laws that have been enacted
or substantively enacted at the reporting date and are expected to apply when the related
deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries
and associates, except where the timing of the reversal of the temporary difference is controlled by
the Group and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
(q) Dividends
Dividends on ordinary shares are charged to equity in the period in which they are declared.
Proposed dividends are shown as a separate component of equity until declared (i.e. proposed
dividend).
56
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
2 Accounting policies (continued)
(r) Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in
the current year. The following comparative figures and presentations has been made
the presentation of the statement of consolidated and separate statement of profit or loss and
other comprehensive income has been changed to present other income or expenses arising
from net foreign exchange gains/losses on cash and cash equivalents as part of other income on
Note 7 as opposed to them being presented together with interest income calculated based on
effective interest rate method in accordance IAS 1.82(a) (as updated from 1 January 2018)
explicitly requires that entities present a specific line called, “Interest revenue, calculated using
the effective interest method” within their Revenue, implying that interest revenue calculated
using the effective interest rate method (EIR) would now need to be differentiated from interest
income calculated using other methods and presented separately.
The net exchange gains on foreign currency cash and cash equivalents have been reclassified
from interest income to other income as follows:
2020 financial statements item:
Shs’000 Change in presentation
Other income as previously reported
Net exchange gains on foreign currency cash and
cash equivalents
31,554
65,358 Reclassified from interest
income
Other income as restated
96,912
Interest income as previously reported
Net exchange gains on foreign currency cash and
cash equivalents
145,059
(65,358 ) Reclassified to other
income
Interest income on short term bank deposits
Interest income on infrastructure bonds
54,701 Split between interest on
25,000
short term deposits and
infrastructure bonds
Interest income as restated
79,701
The interest income has been split to show interest income on short term deposits and interest on
infrastructure bonds to enhance presentation.
3 Critical accounting estimates, judgements and assumptions
The estimates and assumptions that have significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are addressed below:
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including experience of future events that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and assumptions
(i) Useful life of bearer plants
Critical judgement has been made in determining the useful life and maturity period of the
bearer plants. The useful life of the bearer plant is based on experience and expected
productivity of the plant and the expected replanting schedules.
57
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
3 Critical accounting estimates, judgements and assumptions (continued)
(a) Critical accounting estimates and assumptions
(ii) Fair values of biological assets
Critical assumptions are made by the Directors and the independent valuer in determining the
fair values of biological assets. The key assumptions relate to:
the market prices of livestock of similar age, breed and genetic merit will remain
consistent
recent market transaction prices for forestry plantations will remain consistent.
(iii) Growing agricultural produce
Critical judgement has been made in determining the fair value of growing agricultural produce
on bearer plant. The key assumptions made in determination of fair value are:
the biological transformation process of the growing agricultural produce will remain
consistent to prior produce
the market price will remain constant based on estimated future market prices
the actual costs to sell will not change significantly from estimated costs
exchange rate will remain constant based on forecast exchange rate.
(iv) Post-employment benefits obligations
Critical assumptions are made by the actuary in determining the present value of the service
gratuities to non-management employees. The carrying amount of the provision and the key
assumptions made in estimating the provision are set out in Note 16.
(b) Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
(i)
Income taxes
Significant judgement is required in determining the Group’s provision for income taxes. There
are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such differences will
impact the income tax and deferred tax provisions in the period in which such determination is
made.
(ii) Property, plant and equipment
Critical estimates are made by directors in determining the useful lives and residual values to
property, plant and equipment based on the intended use of the assets and the economic lives of
those assets. Subsequent changes in circumstances or prospective utilisation of the assets
concerned could result in the actual useful lives or residual values differing from initial estimates.
(iii) Leases
Judgement is required in determination of the appropriate rate to discount the lease payments
and the assessment of whether a right-of-use asset is impaired.
58
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
4
Financial risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including credit risk, liquidity risk, prices for
its agricultural produce, foreign currency exchange rates and interest rates. The Group’s overall risk
management programme focuses on the unpredictability of financial and agricultural markets and seeks
to minimise potential adverse effects on its financial performance, but the Group does not hedge any
risks.
Financial risk management is carried out by the finance department under policies approved by the
Board of Directors. These policies provide principles for overall risk management, as well as policies
covering specific areas such as foreign exchange risk, interest rate risk and credit risk.
The Group monitors closely the returns it achieves from its crops and considers replacing its biological
assets when yields decline with age or markets change. Further financial risk arises from changes in
market prices of key cost components. Such costs are closely monitored.
Market risk
(i) Foreign exchange risk
The Group and Company operates internationally and is exposed to foreign exchange risk arising
from various currency exposures, primarily with respect to the US dollar and Euro. Foreign
exchange risk arises from future commercial transactions, and recognised assets and liabilities.
The sensitivity analysis below have been determined based on the exposure to exchange rates for
financial assets and liabilities at the reporting date. A 5% increase or decrease is used when
reporting exchange rate risk internally to key management personnel and represents management’s
assessment of the reasonably possible change in exchange rates.
At 31 December 2021, if the Shilling was weaker/stronger by 5% (2020: 5%) against the US dollar
with all other variables held constant, the Group and Company post tax profit would have been Shs
30,667,400 (2020: Shs 54,092,350) higher/lower mainly as a result of US dollar deposits and trade
receivables.
At 31 December 2021 if the Shilling was weaker/stronger by 5% (2020: 5%) against the Euro with all
other variables held constant, the Group and Company post tax profit would have been Shs
4,106,800 higher/lower (2020: Shs 36,550,50).
At 31 December 2021 if the Shilling was weaker/stronger by 5% (2020: 5%) against the Sterling
Pound with all other variables held constant, the Group and Company post tax profit would have
been Shs 1,143,800 higher/lower (2020: Shs 1,380,000).
At 31 December 2021 if the Shilling was weaker/stronger by 5% (2020: 5%) against the Australian
Dollar with all other variables held constant, the Group and Company post tax profit would have
been Shs 127,350 lower/ higher (2020: Shs 269,750).
59
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
4
Financial risk management objectives and policies (continued)
Market risk (continued)
(i) Foreign exchange risk (continued)
Below is a summary of the financial assets and liabilities at their carrying amounts.
USD
EUR
STG
AUD
ZAR
Closing rate as at 31 Dec
2021 (to Kenya Shillings)
Cash and bank balances
Trade and other
receivables
669,427
22,441
5,722
5,119
59,952
17,155
113.15
128.68
153.26
82.27
7.09
Total financial assets
674,546
82,393
22,877
Trade and other payables
61,198
Total financial liabilities
61,198
257
257
-
-
2,547
2,547
USD
EUR
STG
AUD
ZAR
109.20
133.61
149.27
84.27
7.43
Closing rate as at 31 Dec
2020 (to Kenya Shillings)
Cash and bank balances
Trade and other
receivables
910,114
715,880
36,787
191,726
30,642
-
Total financial assets
1,101,840
746,522
36,787
-
-
-
-
-
-
Total in
Shs’000
697,590
82,226
779,816
64,141
64,141
Total in
Shs’000
-
-
-
139
139
-
-
-
-
-
1,662,781
222,368
1,885,149
40,909
40,909
Trade and other payables
19,993
15,521
Total financial liabilities
19,993
15,521
-
-
5,395
5,395
(ii)
Interest rate risk
The Group and Company has interest earning deposits that are held at fixed interest rates and
is therefore not exposed to interest rate risk.
(iii) Commodity price risk
Commodity price risk in the Group primarily arises from price fluctuations and the availability of
avocado, tea, macadamia, blueberries, forestry and livestock. The Group has not entered into
derivative transactions to limit these risks.
If the commodity prices had been 5% higher/(lower) as of December 2021, profit after tax
would have been Shs 153,795,000 (2020: Shs 196,803,000) higher/(lower).
60
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
4
Financial risk management objectives and policies (continued)
Market risk (continued)
Credit risk
Credit risk arises from deposits with banks, financial assets held at amortised cost as well as trade
and other receivables. The Group does not have any significant concentrations of credit risk. The
Group and Company has policies in place to ensure that sales are made to customers with an
appropriate credit history.
The amount that best represents the Group and Company’s maximum exposure to credit risk at
31 December 2021 is the carrying value of the financial assets in the statement of financial
position.
The Group holds collateral in form of vehicles log books registered in the name of staff and Group
amounting to Shs 37,050,000 (2020: Shs 34,238,000) in respect of staff loans amounting to Shs
37,050,000 (2020: Shs 34,238,000) included in other receivables. The Group and Company does
not grade the credit quality of receivables. All receivables that are neither past due or impaired are
within their approved credit limits, and no receivables have had their terms renegotiated.
The Group considers bank balances, financial assets measured at amortised cost and related
party recoverable to have low credit and uses external ratings to check if there is increased risk on
those assets.
The Group’s current credit risk grading framework comprises the following categories:
Category
Description
Basis for recognising
expected credit losses
Performing
The counterparty has a low risk of default and
does not have any past-due amounts
12 – month ECL
Doubtful
In default
Write off
Amount is >30 days past due or there has been
a significant increase in credit risk since initial
recognition
Lifetime ECL – not credit
impaired
Amount is >90 days past due or there is
evidence indicating the asset is credit-impaired
Lifetime ECL – credit-
impaired
There is evidence indicating that the debtor is in
severe financial difficulty and the Group has no
realistic prospect of recovery
Amount is written off
61
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
4
Financial risk management objectives and policies (continued)
Credit risk (continued)
The tables below detail the credit quality of the Group’s financial assets, as well as the Group’s
maximum exposure to credit risk by credit risk rating grades:
31/12/2021
Note External
credit
rating
Internal
credit
rating
12-month or
lifetime
ECL
Trade
receivables
Related
companies
23
23
N/A Performing
N/A Performing
Staff debtors
23
N/A Performing
Lifetime ECL
(simplified
approach)
Lifetime ECL
(simplified
approach)
Lifetime ECL
(simplified
approach)
98,095
39,011
Gross
carrying
amount
Shs’000
Loss
allowance
Shs’000
Net
carrying
amount
Shs’000
71,572
(5,324)
66,248
Cash at bank
Financial
assets held at
amortized cost
31/12/2020
B Performing 12-month ECL
1,655,845
21
B2
N/A 12-month ECL
200,000
2,064,548
Note External
credit
rating
Internal
credit
rating
12-month or
lifetime
ECL
Gross
carrying
amount
Shs’000
Loss
allowance
Shs’000
Trade
receivables
Related
companies
23
N/A
Performing
23
N/A Performing
Staff debtors
23
N/A Performing
Lifetime ECL
(simplified
approach)
Lifetime ECL
(simplified
approach)
Lifetime ECL
(simplified
approach)
49,814
35,264
Cash at bank
Financial
assets held at
amortized cost
Liquidity risk
B Performing 12-month ECL 1,669,662
21
B2
N/A 12-month ECL
200,000
2,206,721
-
-
-
-
(5,324)
98,095
39,011
1,655,845
200,000
2,059,224
Net
carrying
Amount
Shs’000
-
-
-
-
(5,324)
49,814
35,264
1,669,66
2
200,000
2,201,397
251,981
(5,324)
246,657
The group's overall risk management programme focuses on unpredictability of changes in the
business environment and seeks to minimise the potential adverse effect of such risks on its
performance by setting acceptable levels of risk. The group does not hedge any risks.
Prudent liquidity risk management includes maintaining sufficient cash balances, and the availability of
funding from an adequate amount of committed credit facilities. Due to the dynamic nature of the
underlying businesses, the finance department maintains flexibility in funding by maintaining availability
under committed credit lines.
The Directors monitor rolling forecasts of the Group’s liquidity reserve on the basis of expected cash
flow.
62
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
4
Financial risk management objectives and policies (continued)
Liquidity risk (continued)
The table below analyses the Group and Company’s financial liabilities that will be settled on a net basis
into relevant maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances, as the impact of discounting is not
significant.
Group
At 31 December 2021:
- Trade and other payables
- Lease liability
At 31 December 2020:
- Trade and other payables
- Lease liability
Company
At 31 December 2021:
- Trade and other payables
- Lease liability
At 31 December 2020:
- Trade and other payables
- Lease liability
Capital management
Less than 1
year
Shs’000
Between 1
and 2 years
Shs’000
Between 2
and 5 years
Shs’000
Over 5 years
Shs’000
227,494
135
227,629
226,607
59
226,666
-
24
24
-
26
26
-
23
23
-
24
24
-
280
280
-
323
323
Less than 1
year
Shs’000
Between 1
and 2 years
Shs’000
Between 2
and 5 years
Shs’000
Over 5 years
Shs’000
235,877
135
236,012
234,990
59
235,049
-
24
24
-
26
26
-
23
23
-
24
24
-
280
280
-
323
323
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may limit the
amount of dividends paid to shareholders.
The Group ensures that funds are available for capital developments by capping the dividends payable.
The dividends paid and proposed are shown in Note 12.
Fair value estimation
IFRS 13 requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
The fair value of financial instruments that are not traded in an active market (for example, over-the-
counter derivatives) is determined by using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
63
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
5 Segmental reporting - Group
Directors have determined the operating segments based on the reports reviewed by the Executive Directors to make strategic decisions.
The Group operates in two geographical areas in Kenya, Makuyu and Nandi Hills, and under several operating segments. The principal operating segments
currently consist of Avocados and Macadamia whose reported sales are greater than 10% of combined sales of all operating segments and Tea and Forestry
whose assets are more than 10% of combined assets of all operating segments. The business activities of livestock, joint projects and blueberries are included
under “all other segments” as they relate to agricultural operations and do not meet any set criteria for individual reportable segments. There is no single customer
whose revenue amounts to 10% or more of the Groups revenue. Intersegmental sales relate to sale of pallets and are transferred at arms-length.
The Group derives all revenues from contracts with customers for the transfer of goods at a point in time.
Segment assets consist primarily of property, plant and equipment, biological assets, inventories, receivables and prepayments. Unallocated assets are cash,
financial assets, property, plant and equipment, and inventories relating to Main Office and Engineering Stores. Segmental liabilities consist primarily of payables
and accrued expenses. Unallocated liabilities are taxes, payables, accrued expenses and non-current liabilities. The segment information for the reportable
segments for the year ended 31 December 2021 and 31 December 2020 is as follows:
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Tea
Avocados
Shs’000
Shs’000
Shs’000
Shs’000
Macadamia
Shs’000
Shs’000
Forestry
All other segments
Shs’000
Shs’000
Shs’000
Shs’000
Consolidated
Shs’000
Shs’000
Sales
Sales to external customers
Intersegmental Sales
260,396
-
245,801
-
1,675,949 2,311,063
-
-
886,422
-
654,791
-
302,438
24,995
272,975
13,468
146,214
-
110,843
-
3,271,419
24,995
3,595,473
13,468
Total Sales
260,396
245,801
1,675,949 2,311,063
886,422
654,791
327,433
286,443
146,214
110,843
3,296,414
3,608,941
Comprising
Major external customers sales
All other external customers
sales
Intersegmental Sales
Geographical analysis
UK & Continental Europe
Kenya
Others
260,396
-
245,801
-
1,597,572 2,210,502
100,561
78,377
23,987
862,435
629,269
25,522
-
302,438
-
286,443
3,534
142,680
-
110,843
1,885,489
1,385,930
3,085,572
509,901
-
-
-
-
-
-
24,995
13,468
-
-
24,995
13,468
260,396
245,801
1,675,949
2,311,063
886,422
654,791
327,433
286,443
146,214
110,843
3,296,414
3,608,941
-
260,396
-
-
245,801
-
1,597,572 2,210,502
100,561
-
78,377
-
-
23,987
862,435
-
25,522
629,269
-
327,433
-
-
286,443
-
-
142,680
3,534
-
110,843
-
1,597,572
832,873
865,969
2,210,502
769,170
629,269
260,396
245,801
1,675,949 2,311,063
886,422
654,791
327,433
286,443
146,214
110,843
3,296,414
3,608,941
64
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
5 Segmental reporting - Group (continued)
2021
2020
2021
2020
2021
2020
Tea
Avocados
Macadamia
2021
Forestry
2020
2021
2020
2021
2020
All other segments
Consolidated
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Profit/(loss)
Gross profit /(loss) before depreciation
and fair value changes in non-current
biological assets and intersegmental
purchases
Intersegmental (purchases)/sales
Depreciation charge
Changes in fair value of non-current
biological assets
Gross profit/(loss)
Selling and distribution costs
Segment profit/(loss)
Other income
Interest income
Finance costs
Unallocated admin expenditure
Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) for the year
Assets (all located in Kenya)
Segment assets
Unallocated assets
Liabilities
Segment liabilities
Unallocated liabilities
Additions
Property, plant and equipment
Biological assets
31,521
-
(15,216 )
(16,937 )
-
(14,945 )
987,258 1,712,061
(13,468 )
(24,995 )
(99,003 )
(103,661 )
550,227
-
(83,817 )
506,788
-
(75,028 )
120,288
24,995
(4,733 )
77,962
13,468
(4,824 )
(47,329 )
-
(40,092 )
(63,341 )
-
(40,170 )
1,641,965
-
(247,519 )
2,216,533
-
(233,970 )
-
16,305
-
16,305
5,622
-
-
-
21,927
(7,059 )
14,868
-
(31,882 )
-
(31,882 )
5,889
-
-
-
(25,993 )
6,915
(19,078 )
-
-
858,602 1,599,590
(831,840 )
(607,401 )
767,750
251,201
-
-
-
-
-
-
-
-
767,750
251,201
(207,811 )
(80,876 )
559,939
170,325
-
466,410
(51,130 )
415,280
-
-
-
-
415,280
(133,702 )
281,578
-
431,760
(19,249 )
412,511
-
-
-
-
412,511
(106,334 )
306,177
72,280
212,830
-
212,830
-
-
-
-
212,830
(68,521 )
144,309
22,100
108,706
-
108,706
-
-
-
-
108,706
(28,923 )
79,783
65,841
(21,580 )
(1,638 )
(23,218 )
39,747
80,189
(33 )
(526,367 )
(429,682 )
138,338
(291,344 )
35,713
(67,798 )
(259 )
(68,057 )
91,023
79,701
(33 )
(518,076 )
(415,442 )
110,655
(304,787 )
138,121
1,532,567
(660,169 )
872,398
45,369
80,189
(33 )
(526,367 )
471,556
(151,820 )
319,736
57,813
2,040,376
(851,348 )
1,189,028
96,912
79,701
(33 )
(518,076 )
847,532
(225,498 )
622,034
1,010,704
966,025 1,525,299 1,504,886 1,629,193 1,703,236
808,051
758,948
529,560
567,774
40,583
53,122
-
-
-
-
-
-
-
-
5,502,807
1,384,664
6,887,471
5,500,869
1,405,947
6,906,816
40,583
1,307,465
1,348,048
53,122
1,287,245
1,340,367
4,188
-
4,188
7,749
-
7,749
100,152
-
100,152
169,353
-
169,353
73,239
-
73,239
98,617
-
98,617
16,355
16,865
33,220
601
17,439
18,040
24,760
440
25,200
72,659
-
72,659
218,694
17,305
235,999
348,979
17,439
366,418
65
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
5 Segmental reporting - Group (continued)
*Avocados
Smallholder and Outgrowers Hass Avocados
Included in the segment ‘Avocados’ above is trading with smallholders and outgrowers as follows:
Number of cartons exported
Number of cartons sold
Gross Export sales
Selling and distribution costs
Net Export sales
Local sales
Packing expenses
Net return
2021
Shs’000
94,064
94,064
77,844
(33,103)
44,741
3,567
(12,246)
2020
Shs’000
152,202
154,858
132,709
(55,716)
76,993
9,254
(17,874)
36,062
68,373
Paid to smallholders and outgrowers
(87%)
(31,471)
(85%)
(57,948)
Trading profit
Extension services expenses
4,591
(2,278)
10,425
(5,071)
Profit before income tax
2,313
5,354
66
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company
(i) Non current assets
Changes in carrying amounts of non-current biological assets comprise:
Livestock
Shs’000
Plantation
Shs’000
Total
Shs’000
Year ended 31 December 2021
At start of year
Increase due to purchases and development
Gains arising from changes in fair value less costs to sell
due to physical change and price changes
Decrease due to harvest and sales
145,664
440
582,499
16,865
728,163
17,305
65,841
(55,261)
72,280
(34,644)
138,121
(89,905)
At end of year
156,684
637,000
793,684
Year ended 31 December 2020
At start of year
Increase due to purchases and development
Gains arising from changes in fair value less costs to sell
due to physical change and price changes
Decrease due to harvest and sales
145,076
-
570,300
17,439
715,376
17,439
35,713
(35,125)
22,100
(27,340)
57,813
(62,465)
At end of year
145,664
582,499
728,163
Plantations are made up of bluegum and pine trees.
The value of bluegum and pine trees as at 31 December 2021 is Shs 604,700,000 and Shs 32,300,000
respectively (2020: Shs 550,200,000 and Shs 32,300,000) respectively.
There are no biological assets whose title is restricted or pledged as security for liabilities as at 31
December 2021 (2020: Nil).
There were no commitments for development or acquisition of biological assets as at 31 December 2021
(2020: Nil).
(ii) Current assets
Growing agricultural produce on bearer plants as at the reporting date
Avocado – Hass
Avocado – Pinkerton
Total Avocado
Macadamia
Tea
At end of year
67
2021
Shs’000
153,153
72,929
226,082
127,280
1,401
2020
Shs’000
170,293
96,653
266,946
95,852
1,972
354,763
364,770
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company (continued)
Biological assets are carried at fair value less costs to sell at the end of each reporting period.
Plantations comprise forestry. The fair value of forestry is determined by external independent valuation
based on recent market transaction prices.
The fair value of livestock is determined by external independent valuers based on market prices of
livestock of similar age, breed and genetic merit.
The fair value of growing agricultural produce is estimated using the market approach. The key
assumptions made in the determination of the fair value are:
climatic conditions will remain the same and hence productivity will be similar to prior years
the biological transformation process of the growing agricultural produce will remain consistent to prior
produce
the market price will remain constant based on estimated future market prices
the actual costs to sell will not change significantly from estimated costs
exchange rate will remain constant based on forecast exchange rate.
The following table presents Group’s biological assets that are measured at fair value:
Level 1
Level 2
Level 3
Total
Valuation
technique
Shs’000
Shs’000
Shs’000
Shs’000
Year ended 31 December
2021
Livestock
Avocado
Tea
Forestry
Macadamia
Market approach
Market approach
Market approach
Market approach
Market approach
Year ended 31 December
2020
Livestock
Avocado
Tea
Forestry
Macadamia
Market approach
Market approach
Market approach
Market approach
Market approach
-
-
-
-
-
-
-
-
-
-
-
-
156,684
-
1,401
637,000
-
-
226,082
-
-
127,280
156,684
226,082
1,401
637,000
127,280
795,085
353,362
1,148,447
145,664
-
1,972
582,499
-
-
266,946
-
-
95,852
145,664
266,946
1,972
582,499
95,852
730,135
362,798
1,092,933
There were no transfers between any levels during the year.
68
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company (continued)
The following unobservable inputs at the respective year ends were used to measure the Group’s Hass avocado growing agricultural produce classified as
level 3 of fair value hierarchy.
Year ended 31 December 2021
Description
Fair value at
31 December
Shs’000
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Avocado
Produce
153,153
Market approach Yield - Kgs
per Hectare
Net price per
carton
Stage of growth
16,806 – 17,690
The higher the yield, the higher the value
Exchange rate
KShs122.3 – KShs128.7 for €1
€4.97 - €5.23
12% - 15%
The higher the market price, the higher the fair value
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair vale
Year ended 31 December 2020
Description
Fair value at
31 December
Shs’000
Avocado
Produce
170,293
Valuation
techniques
Unobservable
inputs
Market approach Yield - Kgs
per Hectare
Net price per
carton
Stage of growth
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
15,799 - 16,630
The higher the yield, the higher the value
The higher the market price, the higher the fair value
€5.69 - €5.99
12% - 15%
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair vale
Exchange rate
KShs126.9 - KShs133.6 for €1
69
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company (continued)
The following unobservable inputs at the respective year ends were used to measure the Group’s Pinkerton avocado growing agricultural produce classified as
level 3 of fair value hierarchy.
Year ended 31 December 2021
Description
Fair value at
31 December
Shs’000
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Avocado
Produce
72,929
Market approach Yield - Kgs
per Hectare
Net price per
carton
Stage of growth
6,593 – 6,940
The higher the yield, the higher the value
Exchange rate
KShs122.3 - KShs128.7 for €1
€4.66 - €4.91
82% - 85%
The higher the market price, the higher the fair value
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair vale
Year ended 31 December 2020
Description
Fair value at
31 December
Shs’000
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Avocado
Produce
96,653
Market approach Yield - Kgs
per Hectare
Net price per
carton
Stage of growth
7,931 – 8,348
The higher the yield, the higher the value
€4.78 - €5.03
82% - 85%
The higher the market price, the higher the fair value
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair vale
Exchange rate
KShs126.9 - KShs133.6 for €1
70
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6
Biological assets – Group and Company (continued)
The following unobservable inputs at the respective year ends were used to measure the macadamia growing agricultural produce classified as level 3 of fair
value hierarchy.
Year ended 31 December 2021
Description
Macadamia
Produce
Fair value at
31 December
Shs’000
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
127,280 Market approach Yield Kgs/Ha
637 - 670
Net price per kg of
Saleable Kernel
Stage of growth -
Early season crop
Stage of growth -
Late season crop
Exchange rate
USD13.79 - USD14.52
53% - 56%
0%
KShs107.83 - KShs113.15 for 1 USD
The higher the yield, the higher the value
The higher the market price, the higher the fair
value
The higher the stage of growth, the higher the fair
value
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair
vale
Year ended 31 December 2020
Description
Macadamia
Produce
Fair value at
31
December
Shs’000
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
95,852 Market approach Yield Kgs/Ha
609 - 641
Net price per kg of
Saleable Kernel
Stage of growth -
Early season crop
Stage of growth -
Late season crop
Exchange rate
USD14.14 - USD14.88
53% - 56%
0%
KShs103.74 - KShs109.2 for 1 USD
71
The higher the yield, the higher the value
The higher the market price, the higher the fair
value
The higher the stage of growth, the higher the fair
value
The higher the stage of growth, the higher the fair
value
The higher the exchange rate, the higher the fair
vale
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6
Biological assets – Group and Company (continued)
Changes in carrying amounts of growing agricultural produce on bearer plants as at reporting date comprise:
Group & Company
Avocado
Shs’000
Macadamia
Shs’000
Tea Blueberries
Shs’000
Shs’000
Total
Shs’000
Year ended 31 December 2021
At start of year
Increase due to purchases and development
Decrease due to harvest and sales
Gains/(losses) arising from changes in fair value less estimated
point-of-sale costs
266,946
379,201
(379,201 )
95,852
266,764
(266,764)
1,972
226,067
(266,067)
-
26,742
(26,742)
364,770
898,774
(898,774)
)
(40,864
31,428
(571
)
-
(10,007
)
At end of year
226,082
127,280
1,401
-
354,763
Year ended 31 December 2020
At start of year
Increase due to purchases and development
Decrease due to harvest and sales
Gains/(losses) arising from changes in fair value less estimated
point-of-sale costs
148,366
325,338
(325,338 )
118,580
68,932
202,912
(202,912)
26,920
2,681
261,396
(261,396)
(709)
-
29,944
(29,944)
-
219,979
819,590
(819,590)
144,791
At end of year
266,946
95,852
1,972
-
364,770
Gains/ (losses) arising from changes in fair value less estimated point-of-sale costs of growing agricultural produce have been recognised in the
statement of profit or loss as part of cost of sales.
72
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company (continued)
Areas planted at the year end:
Forestry plantations
Cattle numbers at the year end
2021
Hectares
2020
Hectares
Areas planted with various crops and
output of agricultural produce during the
year:
Tea (green leaf)
Avocado
Blueberries
Macadamia
510
927
10
1,032
510
882
10
1,032
2021
Hectares
2020
Hectares
1,810
Head
4,332
2021
Metric
tonnes
7,205
8,468
42
1,725
1,843
Head
4,529
2020
Metric
tonnes
7,892
10,894
13
1,446
Cubic metres Cubic metres
Timber harvested during the year was:
55,976
32,081
Sensitivity Analysis
Agricultural produce of tea bushes is the harvested green leaf which is processed soon after harvest in
a factory to made tea. Timber is included under inventory.
Non-current: - Forestry – a 5% movement in the market price for trees or volume of trees assumed
would result in a Shs 31,850,000 (2020: Shs 29,125,000) increase/decrease in the fair value of forestry.
Non-current: - Livestock – a 5% movement in the market price for trees or volume of trees assumed
would result in a Shs 7,834,000 (2020: Shs 7,283,000) increase/decrease in the fair value of livestock.
Current: – Macadamia - a 5% increase/decrease in the volumes assumed would result in a Shs
13,385,000 (2020 Shs: 10,199,000) increase/decrease in the fair value of macadamia growing crop. A
5% increase/decrease in selling price assumed for macadamia would result in a Shs 12,828,000 (2020:
Shs 9,831,000) increase/decrease in the fair value.
Avocados - a 5% increase/decrease in the volume or the price assumed would result in a Shs
9,784,000 (2020: Shs 10,213,000) increase/decrease in the fair value of Hass avocados growing crop.
Avocados - a 5% increase/decrease in the volume or the price assumed would result in a Shs
4,697,000 (2020: Shs 6,039,000) increase/decrease in the fair value of Pinkerton avocados growing
crop.
Agricultural Risks
Agricultural activity is often exposed to climatic, disease and other natural risks. During the year no
event occurred that gave rise to a material item of income or expense (2020 – Nil). The Group has
mitigated the risk of droughts by having dams that are used for irrigation during the dry season. In
addition new forestry plants, are planted with significant spacing to allow for the plantation to hold on
water for longer periods.
73
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
6 Biological assets – Group and Company (continued)
Fair value of the agricultural produce harvested during the year after
deducting costs to sell:
Tea (green leaf)
Avocado
Blueberries
Macadamia
Others
Other agricultural produce relates to forestry and livestock operations.
7 Other income – Group and Company
Net foreign exchange gain other than cash and cash equivalents
Net exchange gains on foreign currency cash & cash equivalent
Gain on disposal of property, plant and equipment
Rental Income
Sundry
2021
Shs’000
2020
Shs’000
260,396
1,019,078
17,996
838,307
370,347
245,801
1,418,201
7,587
645,420
325,587
2,506,124
2,642,596
2021
Shs’000
2020
Shs’000
1,853
15,998
1,420
4,767
21,331
7,119
65,358
1,958
6,401
16,076
45,369
96,912
The Net foreign exchange gain other than cash and cash equivalents disclosed together with interest
income for the comparative period has been reclassified to other income. This is for year on year
disclosure comparability see note 2 (r).
Sundry relates to income from sale of timber and other miscellaneous sales.
8
Interest income and finance costs - Group and Company
Interest income
Interest income on short term bank deposits
Interest income on infrastructure bonds
Finance costs
Interest on lease liabilities
2021
Shs’000
2020
Shs’000
55,189
25,000
54,701
25,000
80,189
79,701
33
33
33
33
Net interest income and finance costs
80,156
79,668
The other income disclosed together with interest income for the comparative period has been
reclassified to other income. This is for year on year disclosure comparability see note 2 (r).
74
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
9 Expenses by nature – Group and Company
The following items have been charged/ (credited) in arriving at profit before income tax:-
Cost of inventories sold
Employee benefits expense (Note 10)
Depreciation on property, plant and equipment (Note 18)
Repairs and maintenance expenditure on property, plant and
equipment
Exceptional legal expenses
Directors’ remuneration
Auditor’s remuneration
Depreciation of right of use assets (Note 19)
Gain on disposal of property plant and equipment
Gains arising from changes in fair value less costs to sell of non-current
biological assets (Note 6 (i))
10 Employee benefits expense – Group and Company
The following items are included within employee benefits expense:
Salaries, wages, leave pay and medical
Post employment benefits costs:
- Post employment benefit obligations (Note 16)
- Defined contribution pension scheme
- National Social Security Fund
The average number of employees during the year was as follows:
Management
Permanent unionisable employees
Other unionisable employees
2021
Shs’000
1,811,875
920,204
247,519
181,663
-
27,620
6,751
49
(1,420)
2020
Shs’000
1,575,535
810,886
233,970
156,566
137,481
11,917
6,554
446
(1,958)
(138,121)
(57,813)
2021
Shs’000
2020
Shs’000
885,334
776,689
21,324
5,787
6,126
22,562
4,380
7,255
920,204
810,886
2021
70
1,031
2,631
2020
64
1,018
2,678
3,732
3,760
75
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
11
Income tax – Group and Company
(a) Taxation charge
Current tax
Current tax on profit for the year
2021
Shs’000
2020
Shs’000
164,833
154,131
Deferred income tax
Deferred income tax (credit)/charge for the year
Prior year under provision
(14,184 )
1,171
71,323
44
Total deferred income tax (credit)/charge expense (Note 15)
(13,013 )
71,367
Income tax expense
151,820
225,498
(b) Reconciliation of tax based on accounting profit to tax charge
The tax on the Group’s and Company’s profit before income tax differs from the theoretical
amount that would arise using the statutory income tax rate as follows:
Profit before income tax
Tax calculated at the statutory income tax rate of 30%
(2020: 25%)
Tax effect of:
Income not subject to income tax
Expenses not deductible for income tax purposes
Effect of deferred tax computed at 30%
Under provision of deferred tax in prior years
2021
Shs’000
2020
Shs’000
471,556
847,532
141,467
211,883
(10,113 )
19,295
-
1,171
(6,294 )
7,977
11,888
44
Taxation charge
151,820
225,498
(c) Group and Company tax charge relating to components of other comprehensive income
Remeasurement of post-employment benefit obligations:
Actuarial gain (Note 16)
Charge to other comprehensive income (Note 15)
8,626
(2,588 )
700
(210 )
2021
Shs’000
2020
Shs’000
Net charge to other comprehensive income
6,038
490
76
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
11
Income tax – Group and Company (Continued)
(d) Current tax payable/(recoverable)
Group
2021
Shs’000
2020
Shs’000
Company
2021
Shs’000
2020
Shs’000
At start of year
Taxation charge (Note 11 (a))
Paid during the year
(19,664 )
164,833
(135,268 )
35,355
154,131
(209,150 )
(19,611 )
164,833
(135,268 )
35,408
154,131
(209,150 )
At end of year
9,901
(19,664 )
9,954
(19,611 )
12 Earnings and dividends – Group
i) Basic and diluted earnings per ordinary share
Basic earnings per ordinary share is calculated on the profit attributable to the members of Kakuzi Plc
and on the 19,599,999 ordinary shares in issue at 31 December 2021 and 31 December 2020 as
follows:-
2021
2020
Profit attributable to equity holders of the Group (Shs ‘000)
319,736
622,034
Number of ordinary shares in issue (thousands)
19,600
19,600
Basic and diluted earnings per ordinary share (Shs)
16.31
31.74
The Group had no potentially dilutive ordinary shares outstanding at 31 December 2021 and 31
December 2020.
ii) Dividends per ordinary share
At the annual general meeting to be held on 17 May 2022, the Directors will recommend the payment
of a first and final dividend of 440% (2020: 360%) of par value equivalent to Shs 22.00 per ordinary
share (Shs 431,200,000 in respect of the year ended 31 December 2021 ((2020: Shs 18.00 per
ordinary share) (Shs 352,800,000)).
13 Share capital
Authorised
At 1 January 2020, 31 December 2020 and 31 December 2021
Number of
ordinary
shares
(Thousands)
Ordinary
share capital
Shs ‘000
20,000
100,000
Issued
At 1 January 2020, 31 December 2020 and 31 December 2021
19,600
98,000
The par value of the shares is Shs 5
77
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
14 Borrowing facilities – Group and Company
2021
Shs’000
2020
Shs’000
The Group has the following undrawn committed borrowing facilities:
Floating rate (expiring within one year)
426,300
426,300
The facilities are subject to annual review at various dates during the year 2022.
The undrawn bank facilities of Shs 426,300,000 are secured by an undertaking, at any time if and when
required by the banks, to execute legal or other mortgages and charges including fixed or floating
charges or assigned in favour of the banks.
15 Deferred income tax – Group and Company
Deferred income tax is calculated using the enacted tax rate of 30% (2020: 30%). The net deferred
taxation liability is attributable to the following items:
Property, plant and equipment
Biological assets
Other temporary differences*
2021
Shs’000
744,895
297,529
(49,106)
2020
Shs’000
755,908
284,181
(36,346)
Net deferred income tax liability
993,318
1,003,743
*Other temporary differences include provision for bad & doubtful debts, provision for leave, gratuity
provision and unrealised forex gains.
The movement on the deferred income tax account is as follows:
At start of year
(Credit)/charge to profit or loss (Note 11(a))
Charge to other comprehensive income (Note 11(c))
2021
Shs’000
1,003,743
(13,013 )
2,588
2020
Shs’000
932,166
71,367
210
At end of year
993,318
1,003,743
The make up of the deferred tax liability shown on the statement of financial position is made up of the
following deferred tax assets and liabilities.
Deferred income tax assets
Deferred income tax liabilities
78
2021
Shs’000
2020
Shs’000
(49,106 )
1,042,424
(36,346 )
1,040,089
993,318
1,003,743
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
16 Post employment benefit obligations – Group and Company
The amounts recognised in the statement of financial position are determined as follows:
2021
Shs’000
2020
Shs’000
Present value of post employment benefit obligations
116,873
109,585
Split as follows:
Non-current portion
Current portion
77,312
39,561
76,354
33,231
The movement in present value of the post employment benefit obligations is as follows:
At start of year
Net expense recognised in statement of profit or loss
Benefits paid
At end of year
2021
Shs’000
109,585
12,698
(5,410 )
2020
Shs’000
93,066
21,862
(5,343 )
116,873
109,585
The amounts recognised in the statement of profit or loss within ‘cost of sales’ for the year are as
follows:
Current service cost
Past service cost
Interest on obligation
2021
Shs’000
6,271
4
15,049
2020
Shs’000
5,537
4,554
12,471
Total included in employee benefits expenses (Note 10)
21,324
22,562
Actuarial (gain) recognised in other comprehensive income (Note
11(c))
(8,626 )
(700 )
79
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
16 Post employment benefit obligations – Group and Company (continued)
31 December 2021
31 December 2020
Gratuity
(Makuyu)
Shs’000
Gratuity (Nandi
Hills)
Shs’000
Total
Shs’000
Gratuity
(Makuyu)
Shs’000
Gratuity (Nandi
Hills)
Shs’000
Total
Shs’000
At start of year
86,054
23,531
109,585
70,632
22,434
93,066
Current service cost
Past service cost
Interest expense
4,985
-
11,895
1,286
4
3,154
6,271
4
15,049
4,247
4,554
9,548
1,290
-
2,923
5,537
4,554
12,471
16,880
4,444
21,324
18,349
4,213
22,562
Remeasurements:
Losses/(gains) from change in
assumptions
Experience (gains)/losses
(7,431 )
1,531
1,665
(4,391 )
(5,766 )
(2,860 )
490
(558 )
(28 )
(604 )
462
(1,162 )
(5,900 )
(2,726 )
(8,626 )
(68 )
(632 )
(700 )
Benefits paid
(3,203 )
(2,207 )
(5,410 )
(2,859 )
(2,484 )
(5,343 )
At end of year
93,831
23,042
116,873
86,054
23,531
109,585
80
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
16 Post employment benefit obligations – Group and Company (continued)
The principal actuarial assumptions used are as follows:
Gratuity (Makuyu)
Gratuity (Nandi Hills)
Discount rate (% p.a.)
Future salary increases (% p.a.)
first year
second year
Thereafter
2021
13.7%
6%
6%
6%
2020
13.3%
10%
7.5%
7.5%
2021
13.7%
6%
6%
6%
2020
13.3%
10%
7.5%
7.5%
Mortality (pre-retirement) A 1949 - 1952
A 1949 - 1952
A 1949 - 1952
A 1949 - 1952
Withdrawals
Ill-Health
At rates consistent with similar
arrangements
At rates consistent with
similar arrangements
At rates consistent with
similar arrangements
At rates consistent with similar
arrangements
At rates consistent with similar
arrangements
At rates consistent with
similar arrangements
At rates consistent with
similar arrangements
At rates consistent with similar
arrangements
Retirement age
55 years
55 years
55 years
60 years
The sensitivity of the defined obligation to changes in the weighted principal assumptions is:
Impact on post employment benefit obligation
Changes in assumption
Increase/Decrease
in assumption
Discount rate
Salary growth rate
by 1%
by 1%
Shs 3,957,000
Not material
81
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
16 Post employment benefit obligations – Group and Company (continued)
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and
changes in some of the assumptions may be correlated. When calculating the sensitivity of the post employment benefit obligation to significant actuarial
assumptions the same method (present value of the post employment benefit obligation calculated with the projected unit credit method at the end of the reporting
period) has been applied as when calculating the liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
Five year summary:
2021
Shs’000
2020
Shs’000
2019
Shs’000
2018
Shs’000
2017
Shs’000
Present value of post employment benefit obligations – Group and Company
116,873
109,585
93,066
95,233
85,166
Net expense/(income) recognised in the statement of profit or loss and other
comprehensive income – Group and Company
- within ‘cost of sales’
- within ‘other comprehensive income/(loss)
21,324
(8,626 )
22,562
(490 )
19,141
(11,810 )
17,277
(3,046 )
16,065
(1,735 )
Characteristics and Risks of the post-employment benefit obligation:
The post-employment benefit obligation is an unfunded obligation to pay terminal gratuities under its Collective Bargaining Agreements with the union. Therefore
one of the main risks relating to the benefits under the Scheme is the rate of salary growth. As the benefits are based on the final salary, any changes in salary that
differ from the salary escalation rate assumed will have a direct bearing on the benefits paid and the present value of the benefit obligation under the scheme. The
Company’s experience with respect to pre-retirement exit experience, actual ages of retirement and mortality will also impact the benefits payable under the
Scheme, when compared with the assumption made.
82
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
17 Lease obligations – Group and Company
The movement in the lease liabilities is as follows:
Balance at 1 January
Interest on lease liabilities
Lease payments
At 31 December
Amounts due for settlement within 12 months
Amounts due for settlement after 12 months
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
2021
Shs’000
2020
Shs’000
432
33
(3)
412
33
(13)
462
432
135
327
462
135
24
23
21
19
240
462
59
373
432
59
26
24
23
21
279
432
The lease liabilities were discounted on initial recognition using the incremental borrowing rates of
8%. In the current year, there were no remeasurements of the lease liabilities and the incremental
borrowing rates (IBR) at initial recognition was still deemed appropriate.
The cash outflow for leases for the year ended 31 December 2021 was Shs 3,000 (2020 Shs
13,000).
The Group does not face a significant liquidity risk with regards to its lease liabilities. Lease
liabilities are monitored within the company’s treasury function. All lease obligations are
denominated in Kenya Shillings.
83
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
18 Property, plant and equipment
Group and Company
Year ended 31 December 2021
Cost
At start of year
Transfers
Additions
Disposals
At end of year
Depreciation and impairment
At start of year
Charge for the year
Eliminated on disposals
At end of year
Net book amount
Depreciation and impairment at year
end comprises:
Depreciation
Impairment
Buildings,
freehold land,
dams and
improvements
Shs’000
Plant &
machinery
Shs’000
Bearer plants
Shs’000
Motor
vehicles,
tractors,
trailers and
implements
Shs’000
Furniture,
fittings and
equipment
Shs’000
Capital work
in progress
Shs’000
Total
Shs’000
1,414,629
193,470
-
-
1,865,257
7,420
70,810
(1,511 )
1,608,099
1,941,976
368,095
75,833
-
443,928
653,604
78,965
(1,010 )
731,559
410,955
1,411
13,389
(1,536 )
424,219
239,019
54,299
(1,354 )
291,964
352,125
-
13,231
(6,741 )
358,615
239,412
26,414
(6,741 )
259,085
161,420
3,016
9,399
(755 )
173,080
102,973
12,008
(755 )
114,226
420,706
(205,317 )
111,865
-
4,625,092
-
218,694
(10,543 )
327,254
4,833,243
-
-
-
-
1,603,103
247,519
(9,860 )
1,840,762
1,164,171
1,210,417
132,255
99,530
58,854
327,254
2,992,481
443,928
-
443,928
731,559
-
731,559
291,964
-
295,964
259,085
-
259,085
114,226
-
114,226
-
-
-
1,840,762
-
1,840,762
Property, plant and equipment stated at cost of Shs 541,823,027 have been fully depreciated. The notional annual depreciation charge in respect of these values
would have been Shs 66,802,648. There were no items of property, plant and equipment whose title were restricted or pledged as security for liabilities as at 31
December 2021 (2020: none).
Based on an impairment review performed by the Directors at 31 December 2021, no indication of impairment of property, plant and equipment were identified
(2020: none).
Capital work-in-progress largely relates to self-constructed assets that had not been brought into use as at year end and bearer plants that have not yet matured.
84
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
18 Property, plant and equipment (continued)
Group and Company
Year ended 31 December 2020
Cost
At start of year
Transfers
Additions
Disposals
At end of year
Depreciation and impairment
At start of year
Charge for the year
Eliminated on disposals
At end of year
Net book amount
Depreciation and impairment at year end
comprises:
Depreciation
Impairment
Buildings,
freehold land,
dams and
improvements
Shs’000
Plant &
machinery
Shs’000
Bearer plants
Shs’000
1,350,977
63,652
-
-
1,639,426
87,606
139,591
(1,366 )
1,414,629
1,865,257
299,298
68,797
-
368,095
579,578
74,026
-
653,604
345,000
11,417
54,661
(123 )
410,955
185,795
53,347
(123 )
239,019
Motor
vehicles,
tractors,
trailers and
implements
Shs’000
331,760
-
33,238
(12,873 )
352,125
220,049
27,406
(8,043 )
239,412
Furniture,
fittings and
equipment
Shs’000
Capital work
in progress
Shs’000
Total
Shs’000
153,178
-
8,439
(197 )
161,420
92,718
10,394
(139 )
102,973
470,331
(162,675 )
113,050
-
4,290,672
-
348,979
(14,559 )
420,706
4,625,092
-
-
-
-
1,377,438
233,970
(8,305 )
1,603,103
1,046,534
1,211,653
171,936
112,713
58,447
420,706
3,021,989
368,095
-
368,095
653,604
-
653,604
239,019
-
239,412
-
239,019
239,412
102,973
-
102,973
-
-
-
1,603,103
-
1,603,103
Property, plant and equipment stated at cost of Shs 513,347,817 have been fully depreciated. The notional annual depreciation charge in respect of these values would
have been Shs 61,782,521.
Based on an impairment review performed by the Directors at 31 December 2020, no indication of impairment of property, plant and equipment were identified (2019:
none).
Capital work-in-progress largely relates to self-constructed assets that had not been brought into use as at year end and bearer plants that have not yet matured.
85
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
19 Right of use assets – Group and Company
The Group has leased land for its use. Information about the leases in which the Group is a lessee is
presented below:
Cost
At 1 January and at 31 December
Accumulated depreciation
At 1 January
Charge for the year
At 31 December
At 31 December
Amounts recognised in profit and loss
Depreciation expense of right of use assets
Interest expenses on lease liabilities
2021
Shs’000
2020
Shs’000
4,791
4,791
456
49
505
10
446
456
4,286
4,335
49
33
82
446
33
479
The Group is not committed to any arrangements that are short term as at year end.
All of the land leases in which the Group is the lessee contain only fixed payments.
There are no restrictions or covenants imposed by lessors and the Group did not enter into any sale and
leaseback transactions during the year (2020: Nil).
86
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
20
Investment in subsidiaries-Company only
The subsidiary companies are all wholly owned, incorporated in Kenya and have the same year end.
Estates Services Limited and Kaguru EPZ Limited are wholly owned and are dormant.
Year ended 31 December 2021
At start of year
At end of year
Year ended 31 December 2020
At start of year
At end of year
Kaguru EPZ
Limited
Shs’000
1,670
1,670
Kaguru EPZ
Limited
Shs’000
1,670
1,670
Estates
Services
Limited
Shs’000
2,625
2,625
Estates
Services
Limited
Shs’000
2,625
2,625
Total
Shs’000
4,295
4,295
Total
Shs’000
4,295
4,295
There were no restrictions on the Groups ability to access or use assets of the subsidiaries to settle
the Groups liabilities at 31 December 2021 and 31 December 2020.
21 Financial assets held at amortised cost – Group and Company
Financial assets held at amortised cost comprises treasury bonds carried at amortised cost.
Maturity rate
Average
Interest
Rate
Treasury Infrastructure Bonds
12.50%
Maturity
date
18-Nov-22
and
18-Nov-24
2021
Shs’000
2020
Shs’000
200,000
200,000
The movement in financial assets held to maturity is as follows:
At start of year
Redeemed in the year
At end of year
Non current portion
Current portion
2021
Shs’000
200,000
-
2020
Shs’000
200,000
-
200,000
200,000
100,000
100,000
200,000
200,000
-
200,000
The Directors consider that the carrying amounts of the financial assets held to at amortised cost in
the consolidated and separate financial statements approximate their fair values.
None of the financial assets had been pledged as collateral for liabilities or contingent liabilities as at
31 December 2021 (2020: Nil).
87
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
22
Inventories – Group and Company
Spare parts and consumable materials
Macadamia nuts
Blueberries
Poles & timber
Total inventories
2021
Shs’000
211,832
241,441
3,222
47,928
2020
Shs’000
165,466
220,638
-
48,912
504,423
435,016
The cost of inventories recognised as an expense and included in cost of sales amounted to Shs
1,811,875,000 (2020: Shs 1,575,535,000). There were no write downs during the year (2020: Nil).
23 Receivables and prepayments – Group and Company
Trade receivables
Loss allowance
Trade receivables - net
Due from related companies (Note 27(v))
Staff debtors
Value Added Tax (VAT) Refunds receivable
Other receivables and prepayments
Less non current portion
Current receivables & prepayments
Non current receivables
2021
Shs’000
2020
Shs’000
71,572
(5,324 )
66,248
98,095
39,011
98,387
79,874
381,615
(38,745 )
251,981
(5,324 )
246,657
49,814
35,264
60,963
70,057
462,755
(35,555 )
342,870
427,200
38,745
35,555
Other receivables comprise trade deposits and a shipping rebate
Non current receivables are due within five years from reporting date and are secured and are charged
interest of 2.1% (2020: 2.1%). None of the amounts were impaired (2020: Nil).
Trade Receivables
The Directors of the Company estimate the loss allowance on trade receivables at the end of the
reporting period at an amount equal to lifetime expected credit loss (“ECL”).
The expected credit losses on trade receivables are estimated using a provision matrix by reference to
past default experience of the debtor and an analysis of the debtors current financial position, adjusted
for factors that are specific to the debtors, general economic conditions of the industry in which the
debtors operate and an assessment of both the current as well as the forecast direction of conditions at
the reporting date.
The following table details the risk profile of trade receivables based on the Group’s provision matrix.
31/12/2021 & 31/12/2020
Trade receivables – days past due
31 - 60
<30
Not past due
Total
Shs’000 Shs’000 Shs’000 Shs’000 Shs’000 Shs’000
61 - 90
>90
Expected credit loss rate
0%
0%
====== ======
0%
======
0%
======
100%
======
0%
======
88
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
23 Receivables and prepayments – Group and Company (continued)
The following table shows the movement in lifetime ECL that has been recognised for trade receivables
in accordance with the simplified approach set out in IFRS 9.
Balance at 1 January 2020
Loss allowance charge for the year 2020
Balance as at 31 December 2020
Loss allowance charge for the year 2021
Balance as at 31 December 2021
24 Payables and accrued expenses
Trade payables
Due to related companies (Note 27(v))
Accrued expenses
Leave obligations
Other payables
Collectively
assessed
-
-
Individually
assessed
4,934
390
Total
4,934
390
-
-
-
5,324
5,324
-
-
5,324
5,324
Group
Company
2021
Shs’000
110,320
-
19,898
36,634
60,642
2020
Shs’000
86,353
-
24,045
34,434
81,775
2021
Shs’000
110,320
8,383
19,898
36,634
60,642
2020
Shs’000
86,353
8,383
24,045
34,434
81,775
227,494
226,607
235,877
234,990
Other payables relate to provisions for audit, legal and and sundry payables.
Leave obligations covers the Group’s liability for accrued annual leave. The movement on the leave
obligations for Group and Company is as follows:
At start of year
Charge for the year
Paid during the year
2021
Shs’000
2020
Shs’000
2021
Shs’000
2020
Shs’000
34,434
4,711
(2,511)
23,727
12,847
(2,140)
34,434
4,711
(2,511)
23,727
12,847
(2,140)
At end of year
36,634
34,434
36,634
34,434
The carrying amounts of the payables and accrued expenses approximate to their fair values.
89
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
25 Cash and cash equivalents - Group and Company
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:-
Cash at bank and in hand
Short term deposits
2021
Shs’000
74,612
1,581,607
2020
Shs’000
925,461
744,663
1,656,219
1,670,124
The short term deposits are denominated in Kenya Shillings (Shs) and United States Dollars (USD) and
have a maturity of three months or less from the date of acquisition or are repayable immediately with
no loss of interest. The effective interest rates on the short term deposits as at 31 December were as
shown below:
Kenya Shillings deposits
United States Dollar deposits
2021
7.10%
3.00%
2020
6.94%
3.18%
The Directors consider that the carrying amounts of cash and cash equivalents in the consolidated
financial statements approximate their fair values.
There were no amounts of cash and cash equivalents held by the Group that were not available for use
by the Group as at 31 December 2021 (2020: Nil).
26 Note to the consolidated and separate statement of cash flows
Reconciliation of profit before income tax to cash generated from operations:
Profit before income tax
Adjustments for:
Net exchange gains on foreign currency cash & cash equivalents (Note 7)
Interest expense on lease liabilities (Note 8)
Interest income (Note 8)
Depreciation (Note 18)
Depreciation of right of use assets (Note 19)
Gain on disposal of property, plant and equipment
Gains arising from changes in fair value less estimated point-sale costs of
non-current biological assets (Note 6 (i))
Decrease in the fair value of biological assets due to sales and harvest and
disposal (Note 6 (i))
Fair value movement in biological assets – growing agricultural produce
(Note 6 (ii))
Changes in working capital:
- Increase in inventories
- Decrease/(increase) in receivables and prepayments
- Increase in payables, accrued expenses and lease obligations
- Increase in post-employment benefit obligations
2021
Shs’000
2020
Shs’000
471,556
847,532
(15,998 )
33
(80,189 )
247,519
49
(1,420 )
(65,358 )
33
(79,701 )
233,970
446
(1,958 )
)
(138,121
)
(57,813
89,905
62,465
10,007
)
(144,791
(69,407 )
81,140
887
15,914
(33,323 )
(152,913 )
44,896
17,219
Cash generated from operations
611,875
670,704
90
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
27 Related party transactions – Group and Company
The group is controlled by Camellia Plc, a company incorporated in England. Camellia Plc is the
ultimate parent of the Group. There are other Camellia Plc group companies that are related to Kakuzi
Plc through common shareholdings. Fellow Subsidiaries within the Camellia Plc Group act as brokers
and managing agents for certain products and operations of the Group.
The following transactions were carried out with related parties:
i) Sale of goods to:
Eastern Produce Kenya Limited
ii) Purchase of goods and services from:
Robertson Bois Dickson Anderson (RBDA) Kenya Branch
Eastern Produce Kenya Limited
Eastern Produce Regional Services Limited
2021
2020
Shs’000
Shs’000
197,640
129,366
24,654
73,724
74,423
125,112
71,759
-
172,801
196,871
The purchase of goods and services includes a charge in relation to the Executive Directors
remuneration (including value of benefits in kind) amounting to Shs 28,657,000 (2020: Shs
28,584,000).
iii) Key management compensation
Salaries and other short-term employment benefits
Post employment benefits
iv) Directors’ remuneration
Fees for services as a Director
Other emoluments
-
91
2021
Shs’000
2020
Shs’000
96,327
971
74,754
357
97,298
75,111
27,125
495
11,529
388
27,620
11,917
Kakuzi Plc
Consolidated and Separate Financial Statements
For the year ended 31 December 2021
Notes to the Consolidated and Separate Financial Statements (continued)
27 Related party transactions – Group and Company (continued)
v) Outstanding balances arising from sale and purchase of goods and service
Due from related Companies
Eastern Produce Kenya Limited
RBDA Kenya Branch
Eastern Produce Regional Services Limited
Due to related Companies
Estates Services Limited
Kaguru EPZ Limited
Group
2021
2020
Company
2021
2020
Shs’000
Shs’000
Shs’000
Shs’000
82,295
-
15,800
34,104
15,710
-
82,295
-
15,800
34,104
15,710
-
98,095
49,814
98,095
49,814
-
-
-
-
-
-
2,570
5,813
2,570
5,813
8,383
8,383
28 Commitments – Group and Company
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised in the financial statements is
as follows:
Property, plant and equipment
29 Contingent liabilities
2021
Shs’000
2020
Shs’000
48,168
18,532
Various claims have been submitted against the Group in relation to different litigations. It is not practical
to estimate the potential effect of these claims but legal advice indicates that it is not probable that a
significant liability will arise. The Directors believe that the ultimate resolution of these legal proceedings
would not have a material effect on the Group’s consolidated and separate financial statements.
30 Subsequent events
There have been no significant events after the reporting date to the date of signing these accounts
which have a material financial statement impact at 31 December 2021.
------------- 000 -------------
92
Kakuzi Plc
Company’s five year record
Turnover
3,296,414
3,608,941
2,888,662
3,152,831
2,823,926
2021
Shs'000
2020
Shs'000
2019
Shs'000
2018
Shs'000
2017
Shs'000
Profit before income tax
Income tax
471,556
(151,820)
847,532
(225,498)
1,014,477
(301,038)
684,083
(202,489)
849,123
(257,480)
Profit after income tax
319,736
622,034
713,439
481,594
591,643
Profit attributable to the members of
Kakuzi Plc
319,736
622,034
713,439
481,594
591,643
Dividends: -
Proposed final dividend - for the year
431,200
352,800
274,400
176,400
137,200
Capital and reserves: -
Called up share capital
Reserves
98,000
5,437,282
98,000
5,464,308
98,000
5,116,184
98,000
4,567,335
98,000
4,219,895
Total equity
5,535,282
5,562,308
5,214,184
4,665,335
4,317,895
Basic earnings per ordinary share (Shs)
16.31
31.74
36.40
24.57
30.19
Dividends per ordinary share (Shs)
22.00
18.00
14.00
9.00
7.00
Dividend cover
0.74
1.76
2.60
2.73
4.31
Total equity per ordinary share (Shs)
282.41
283.79
266.03
238.03
220.30
All amounts are stated in Kenya shillings thousands (shs’000) except where otherwise indicated.
93
Kakuzi Plc
Major shareholders and distribution schedule
MAJOR SHAREHOLDERS
The 10 major shareholders and their holdings at 31 December 2021 were:
Shareholder name
Number of
ordinary shares
John Kibunga Kimani
Bordure Limited
Lintak Investments Limited
Standard Chartered Nominees a/c 9532
1
2
3
4
5 G.H. Kluge & Sons Limited
6
7 HSBC Global Custody Nominee (UK) Limited
8
9
10 Lise Larsen & Esther Ebba Aasberg Larsen
Joe B.Wanjui
John Okuna Ogango
Kakuzi Neighbourhoods Development Foundation
6,338,099
5,107,920
4,828,714
429,134
239,118
216,598
200,000
122,004
109,700
48,999
%
32.34%
26.06%
24.64%
2.19%
1.22%
1.11%
1.02%
0.62%
0.55%
0.25%
* Camellia Plc incorporated in England, by virtue of its interests in Bordure Limited incorporated in
England and Lintak Investments Limited incorporated in Kenya, is deemed to be interested in these
ordinary shares.
17,640,286
90.00%
DISTRIBUTION SCHEDULE
The distribution of ordinary shares as at 31 December 2021 was:
Ordinary shares range
Less than 500
501 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
Over 1,000,000
Number of
shareholders
Number of
ordinary shares
806
426
45
39
6
3
124,010
768,172
340,211
776,319
1,316,554
16,274,733
%
0.63%
3.92%
1.74%
3.96%
6.72%
83.03%
1,325
19,599,999
100.00%
94
Kakuzi Plc
Form of Proxy (94th Annual General Meeting)
I/WE
______________________________________________________________________________________
of ________________________________________________ being a member of the above-named Company,
hereby appoint: ____________________________________________________________________________
of (address) _____________________________________ Telephone Number _________________________
Email Address _____________________________, or failing him/her _________________________________
of (address) ______________________________________ Telephone number _________________________
Email Address ____________________________________________________________ or failing him/her the
duly appointed Chairman of the meeting, as my/our proxy, to vote for me/us on my/our behalf at the Annual
General Meeting of the Company to be held on Tuesday,17th May 2022 at 12.00 noon, and at any adjournment
thereof.
As witness my/our hand this……………………………………day of ………………………………...2022
Signed …………………………………………………………………………………..
Signed …………………………………………………………………………………..
Note:
1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead and a
2.
proxy need not be a member of the Company.
In the case of a member being a limited Company, this form must be completed under its common seal or
under the hand of an officer or attorney duly authorized in writing.
3. Proxies must be in the hands of the Company’s Registrars no later than Friday, 13th May 2022.
95
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STAMP
1
D
L
O
F
Kakuzi Plc
P O Box 24
Thika 01000
Kenya
FOLD 3
INSERT FLAP INSIDE